You have questions. I have answers.
Question: What is DWAC?
Answer: DWAC is a SPAC.
Q: Thanks a ton.
A: I just had to get that out of my system. A SPAC is a Special Purpose Acquisition Vehicle—a big pile of money that does nothing, but is nonetheless traded on the stock market. Eventually, a SPAC buys some private company and bingo, the private company is public.
Q: Swell. And DWAC?
A: DWAC stands for Digital World Acquisition Corp. It went public in September 2021 with $1 billion in investor commitments. In October, DWAC announced that it planned to merge with Donald Trump's media company, whose main asset is Truth Social, Trump's personal Twitter clone.
Q: That was quick! So DWAC was formed for the specific purpose of acquiring Truth Social and taking it public?
A: No, no, no. That's illegal. It's a total coincidence that DWAC's founder, Patrick Orlando, had been discussing this with Trump since March and then formally announced the deal just a few weeks after DWAC went public.
Q: Oh.
A: Save the sarcasm, smart guy. Orlando says the discussions weren't "substantive." And eventually the SEC approved everything—though only after a long investigation. In 2023 DWAC had to fire Orlando and pay a bunch of fines, which they blamed on, um, "unprecedented headwinds."
Q: I'll bet. But everything is all set now for the merger?
A: Well....
Q: Oh Christ. What happened?
A: Yesterday two separate lawsuits were filed. Orlando is suing DWAC for stiffing him on the shares he owns, while the two original architects of Truth Social are suing for more or less the same reason.
Q: That sounds familiar.
A: Yeah, Trump has a habit of screwing his former partners when they're no longer of any use. But despite the lawsuits, DWAC is still planning to go ahead with the Truth Social merger. Its stock price is up to $40 and its market valuation is up to $1.5 billion in anticipation of the deal.
Q: But that's only because of the $1 billion it already has in cash, right?
A: Ah, no. They had to return all that money thanks to their unprecedented headwinds.
Q: So they don't have any money anymore?
A: Not at all! They raised new money later—though only about $300 million.
Q: But they're worth $1.5 billion anyway?
A: Yes, though when you add in Trump's ownership stake in Truth Social, the number of shares outstanding will increase from 37 million to 133 million after the merger. This suggests investors are foreseeing a true valuation of $5.3 billion. Trump's share of that will be around $3 or $4 billion.
Q: Wow! Truth Social must be doing really well.
A: Not really:
Q: wtf?
A: It's a little hard to wrap your head around, isn't it? But thanks to MAGA Nation, DWAC's stock skyrocketed after Trump won the Iowa Caucus:
Q: Let me see if I have this straight. Trump has a crappy, money losing social network that he himself has valued on financial disclosure forms at $5-25 million.
A: Right.
Q: But then a Miami financier with Chinese backing proposed to give him a gift by engineering a merger that effectively valued the company at a billion dollars or so.
A: Correctamundo.
Q: That fell through, but eventually some new benefactors ponied up. Then Trump's ever-gullible fans went nuts and pushed DWAC's stock so high that Trump was likely to score more than $3 billion from the merger.
A: True, but Trump wanted more. So his finance buddies found a way to screw all the original founders and push Trump's stake up to nearly $4 billion.
Q: Damn. Must be nice.
A: Indeed. Even the investors will make money. Basically, mom-and-pop stock players who adore Trump are shoveling a whole lot of money his way. Eventually it will all collapse, but by then all the rich folks will be out.
Q: Wait. That's sort of like....
A: Yes, Trump Hotels and Casino Resorts. After going broke in the early '90s, Trump put all his crappy assets into THCR and floated it on the stock market. His fans bought the stock while he took home millions in pay, until eventually the company declared bankruptcy a few times. The stock went down to 2¢ and the remains were auctioned off to Carl Icahn a few years ago.
Q: Is that what's going to happen with DWAC?
A: Who knows? But I imagine that's the plan.
Of course, keep in mind that there's a six-month lockup on the stock following the merger, so Trump can't cash out right away. Even if the merger goes ahead on schedule, there's no telling how much the stock will be worth when the lockup expires.
Q: Probably a lot, though, especially if Trump wins the election.
A: Yes, probably a lot. After all, Truth Social barely has any revenue. Its value is almost entirely based on the value of Trump's tweets. If he's president, his tweets will be worth a lot.
Q: Damn.
A: Yeah. Damn.
Why will Trump's posts on Truth social be worth even a penny? Who exactly will pay for them and why?
It's all about Nazi virtue signalling.
People who want to influence the President. Because it’s a business relationship, not a bribe.
Pravda Social.
Да!
If Trump is re-elected, financial fkery will be the LEAST of our problems.
But meanwhile, ain't nobody gonna post a bond for him with THAT sh!t as collateral.
That is an awfully good point, if that thing is worth so much why can't he borrow against it for his bond?
If I understand this explanation, it's because he won't be able to part with his shares before December. At that point he'll either be president-elect, in which case he can name his own price, or he won't, in which case they'll be wallpaper.
So who would front him the money now, against that kind of collateral? If you ask me, it would only be people who both have gazillions in hand, and would benefit incalculably from a trump win (according to whatever calculus they're using), and so would be willing to roll the dice. Must be lots of people out there who'd do that out of the goodness of their hearts. So, whew, that's all right then, eh?
"..would benefit incalculably .."
Not necessarily. They may regard it as an insurance for the case he wins. If he loses, they lose the money, but if they can afford that it does make sense.
These people don't look closely at history do they? Everyone who gets close to Trump eventually loses. They might seem like they are winning, but the facade only holds for so long. I guess like all gamblers, they think they will be able to sell at the top of the market?
Too many people are assuming this is money from actual investors instead of strawmen propped up by Russian and Chinese oligarchs. If they are just buying a president, it's money well spent.
I continue to believe he's already owned property. The comments by both boys about "all the money we need" from Russia, the fraction of Trump properties bought by opaque overseas investors, his fawning obsequiousness before Putin -- the guy isn't just bought and paid for -- he'd be happy to turn and walk away from that -- no no. He is OWNED. They have the receipts (or they've fabricated them, and/or threatened his life.) He is OWNED by the Russians. It's kind of scary ...
There are only two reasons I can think that he's actually in this race at all. One is to evade prosecution and the other is to evade bills coming due and capitalize on the revenue potential he missed out on in round one. He didn't understand how the game was played the first time around.
I think the bulk of the initial billion was they would give people $450 million in stock if they agreed to put in $300 million in a public/ private deal (private/ public?)
Which can be legitimate in certain situations, but is usually pretty sketchy.
Plus, let's not forget the whole reason Trump is using a SPAC is because none of his companies would come close to passing the scrutiny of going public. It's a way of bypassing the whole process of going public.
The whole thing defies belief. It makes Dutch tulip mania look rational. Truth Social will become worthless the day Trump dies or goes to prison. Investors know this, but they're willing to gamble billions that they can make a killing before that happens and some other suckers will cop the loss. The most offensive aspect is that Trump stands to make potentially billions for literally doing nothing and risking only a trivial amount of money.
Let's hope he at least cheats Devin Nunes out of his share of the loot.
I'm currently reading The Hype Machine by Sinan Aral and there's interesting documentation on pump and dump schemes like what this seems to be. Shorter - this does work if you know how to play it well and get out before it all blows up on you. I don't doubt that a few people will slide out with a millions. I'm not sure Trump will be one of them, he's just the vehicle.
Never thought I'd see a Presidential primary campaign also double as a pump and dump scheme. Trump is truly an innovator.
Nice work if you can get it
100% accurate. Trump is fleecing a lot of people. By the time he's dead, Trump will have fleeced a simple majority of Americans, but they won't see it this way, even as their retirement money has disappeared. So be it.
True, though in this case I think DWAC is more about creating a convenient vehicle for Putin to dump money into Trump's pocket without relying on Deutsche Bank "loans" (which thanks to the recent law suit he no longer has easy access to).
One born every minute...
oh wait...Musk could buy it!!!
First the damn sneakers and now this?
The people outraged about Hunter Biden are going to go nuts when they hear about this. /s
Q: This is a very wordy blog post. Can you say the same thing in fewer words?
A: Yes.
"It's easier to fool people than it is to convince them that they have been fooled." - Mark Twain
It is indeed a bit wordy. I had to read it twice to understand it, and I'm relatively savvy about the stock market, though not super savvy. It basically seems to boil down to the GameStop phenomenon; some fans of Trump (in this case) view this as a way to show support for him and have driven up the stock price of something pretty worthless solely because Trump himself will benefit from it if the price stays high, although maybe their motivation (as it was with GameStop, apparently) is to own the libs (in the case of GameStop, to own the Wall Street poobahs) by showing them that Donald Trump stuff is too worth a lot of money.
What's a little weird about the whole thing is that it seems to run counter to the dynamic we've seen in which DT's fans are kind of fair-weather fans; what I mean is, he calls for them to show up when he's going to be indicted or what not, and about 100 of them actually show up. Now, if I have it right, many (millions? thousands?) of small investors are willing to buy something worthless for an inflated price, just because it has the name Trump near it. Or something like that.
There's something weird about the whole thing. The people who won't even show up for his courthouse rallies are suddenly willing to lose millions on him? Is a puzzlement...
Has anyone tried to resell his NFT's?
So what you're saying is that Trump should have no trouble ponying up that $500 million or so he owes so far in civil judgments? What a relief!
Nobody could go wrong looking down on Donald Trump.
---Fran Lebowitz
"A SPAC is a Special Purpose Acquisition Vehicle"
I'm still pondering why it isn't "SPAV". (For that matter, why not "SPAZ"?)
The acronym started life as "special-purpose acquisition company" and that's what Investopedia still calls them. Its article says they've been around for a while as an IPO alternative, got briefly popular right after the pandemic to the point where the SEC tightened its oversight, and they're being used less now. The article has a special box about DWAC's initial price surge in 2022, and J Frank Parnell has tabbed why it happened.
Thanks!
A lot of Trump supporters took their life savings and jumped into DWAC back in 2022-2023 when the stock price peaked at $97. They have now gone from being disastrously underwater to merely seriously underwater. If they are smart they will get out now, but they aren’t and probably won’t.
Come on, Kevin. How else is he going to pay off his legal fees, judgements against him etc.?
He’s going to win. Make your peace with it.
President Biden is struggling to overcome doubts about his leadership inside his own party and broad dissatisfaction over the nation’s direction, leaving him trailing behind Donald J. Trump just as their general-election contest is about to begin, a new poll by The New York Times and Siena College has found.
With eight months left until the November election, Mr. Biden’s 43 percent support lags behind Mr. Trump’s 48 percent in the national survey of registered voters.
Correctamundo.
Nate Silver (you know, the objective gambler who doesn't let his subjective preferences get in the way of his calculation of probabilities) today has an interesting post on his substack page.
https://www.natesilver.net/p/bidens-problem-is-with-swing-voters
Registered Democrats and registered Republicans are now roughly equal in number (28%). Independents are now at about 42%. Furthermore, nearly all the independents who voted for Trump in 2020 are planning to vote for him again. But 1 in 4 independents who voted for Biden in 2020, are now planning to vote for Trump.
Another part of Silver's article:
Why do these Biden 2020 voters now prefer Trump in 2024?
Is it Biden’s age? All the evidence points toward age being a major factor. Is it to the point where Democrats ought to pull the emergency lever and nominate a different candidate instead?
Is it general disgruntlement with the direction of the country and the declining incumbency advantage? That might also argue for replacing Biden.
Is it that the White House’s messaging is often targeted at college-educated progressives? This is perhaps the easiest thing to fix.
Is it that Biden's support in 2020 came from voters who thought that Trump mishandled the COVID pandemic — an issue which has now faded from public view — and voters see a country that still has a lot of problems? That could be a hard problem to solve, because it stems from a sort of Faustian bargain that Biden made in 2020, overpromising what might be possible with new leadership. Nevertheless, Biden does have a lot of substantive, bipartisan accomplishments that he can tout. The White House often doesn’t focus on this, instead devoting a high percentage of their bandwidth to the dangers of Trump.
Or is it the decreasing loyalty of Black, Hispanic and Asian American voters to the Democratic Party? In the Times poll, nonwhite voters were considerably more likely to switch from Biden to Trump. There are many theories for this apparent shift. Some are frankly quite bearish for Democrats, implying that they’ll need to rethink their entire coalition, not something easily done in the next eight months.
I hate to say it, but I tend to agree. Dems have f'd up on immigration too badly. The swing voters want the doors closed, they've had it with housing cost increases and blame increasing numbers of people in their communities - right or wrong.
The only way Trump doesn't win is if he full out loses it on camera between now and November - which is not a non-zero chance.
No. As Altoid pointed out above, Trump cannot use any DWAC shares to pay off his civil judgements. He owes $83M to E. Jean Carroll and about $500M to the State of New York, and he has already acknowledged in the NY case that he doesn't have it. Trump is going to have to sell off his commercial properties on short notice, which means at fire sale prices, which means he may not get enough from them to cover the mortgages, liens, and other encumbrances against them. So -
TRUMP IS ABOUT TO FILE BANKRUPTCY.
This will make a dent in his campaign.
I realize that I share my country with a fair number of idiots, but I still find it difficult to believe that TFG who lost by seven million votes last time, running as an incumbent, could win this time running against the incumbent, given a) he has done nothing in the meantime to broaden his appeal, which has never amounted to a majority of actual voters, and b) he has done two things likely to lose him votes: incite a crowd to vandalize the nation’s Capitol in hopes of overthrowing the government, and appoint the Supreme Court Justices that took away a right of personal autonomy from half the electorate. Are there a bunch of eligible voters who have been sitting on the sidelines waiting to vote for an insurrectionist facing felony charges?
You guys just made a whole thread of off-topic propaganda meant to demoralize Democratic voters. Y'all are getting a lot more sophisticated these days. Kudos!
I love this format. Let me emphasize: I LOVE this format. Please consider this a regular thing, peut-être monthly?
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