If 65 percent of the company’s shareholders do not agree to the extension by Thursday, the company could be forced to liquidate, a devastating blow that could leave Truth Social with nothing.
The company can delay the merger for six months without shareholder approval, but executives will need to invest millions to keep the company afloat. Some investment analysts said they doubt the extension will give the company enough time to resolve all outstanding concerns about the merger.
Digital World, a Special Purpose Acquisition Company, or SPAC, first emerged in a lot of interest last year. But federal scrutiny, a lackluster Trump website launch, and other issues drained much of the market’s excitement.
Digital World’s stock price fell more than 11 percent on Tuesday, closing at $22.30 — nearly 90 percent less than its peak of $175 last October. If the company were to liquidate, all shareholders — including those who bought at very high prices — would be paid about $10 a share.
In that case, Trump Media & Technology Group startup Trump, of which Truth Social is the primary product, will not be able to benefit from the roughly $1.3 billion investment it has been relying on since Digital World’s initial offering last September.
Meanwhile, Trump’s startup has backed tens of millions of dollars in short-term loans. The company is also in dispute with a reticent web hosting service over allegations of Unpaid bills.
The Securities and Exchange Commission and the Financial Industry Regulatory Authority are Investigation Digital World, including questions about whether the company negotiated its deal with Trump before it went public, which would violate securities law. A federal grand jury also requested information from Trump’s company.
Without SEC approval, any transaction is halted indefinitely.
Digital World has long celebrated that many of its shareholders are small investors, known as retail investors, who bought shares for financial or personal reasons and are not part of a larger investment.
But the potential vote failure highlights the risks of such funding, given that ordinary shareholders may not be following financial statements closely and need to be persuaded to vote in large numbers.
“There are a lot of retail investors who don’t pay much attention, or they don’t know what to do,” said Michael Allrough, associate professor of law at New York University. Or they might think, ‘Hey, I’d rather have this merger happen sooner rather than later,’ without realizing that the only reason they asked for it was that there was a good chance they couldn’t complete the merger at all.
Olrug said this investor indifference wouldn’t necessarily be a fatal blow, as the company could pay to extend the merger deadline and try again within six months. But it may also point to deeper questions about the company’s ability to survive.
“The big question becomes: Why is it taking so long to complete the deal?” He said. He added, “It’s a bit surprising to me that it will be difficult for them to ‘meet the requirements of the SEC,’ unless they follow one of these Trump-type legal strategies to fight any kind of legal authority.”
Orlando was quick to alert shareholders of the company’s need for their vote. On his Truth Social account, he has posted or retweeted – or “believed” and “re-believed” in the site’s language – nearly 30 messages over the past week inviting people to vote.
The company last week pushed shareholders to open their email boxes for voting details: “Please remember to check your SPAM folder,” says one of the ads. Foot with SEC. Orlando also scored an interviewposted on Rumble, a conservative video site that provides support services to the Truth Social, detailing how investors should vote.
The host of the call, a Christian worship leader named Chad Niedohene, urged fellow DWAC investors to “get these votes,” saying, “We consider ourselves the diamond hands of all diamond hands.” The video It was viewed nearly 500 times.
The company’s leaders own about 18 percent of the shares and will vote to approve it, they He said in the SEC file, but they would need a lot more votes than that to reach the 65 percent threshold. Orlando said on the rumble a call The turnout rate among individual investors in such votes is closer to about 25 percent.
Truth Social is the flagship show of Trump Media & Technology Group, where Trump debuted after losing the White House who boasted he could become one of the biggest players in the media, rivaling giants like Disney and Facebook.
Trump sought to portray everything as going according to plan. On Saturday, he posted on the Truth Social that the site was “working really well,” despite the federal investigation, and said, “Anyway, I don’t need funding, ‘I’m really rich!'” “Private company anyone???” (The actual size of Trump’s fortune is in dispute; described themselves.”king of religionhas been linked to Six cases of corporate bankruptcy.)
On Tuesday, ahead of the special meeting, Trump announced that the site was “doing a great job” and that it had become “the most interactive social media platform anywhere on the Internet!” However, in every measure of online engagement – web traffic, downloads, and number of followers – the site remains a small fraction of the most popular sites and has even fallen from release Six months ago. In the same post, Trump encouraged companies to buy ads on the site.
in statement Last week for the pro-Trump blog Just the News, the Trump startup said the Truth Social is “on a solid financial footing” and that “any assertion to the contrary is intentionally false talk.”