There’s more bad news for the company that’s supposed to merge with Donald Trump’s Truth Social to go public: Investors are starting to jump ship.
Digital World Acquisition Corp. — the special purpose acquisition company (SPAC) that Truth Social is to make public — revealed in a Securities and Exchange Commission filing on Friday that investors have waived $139 million in commitments of the $1 billion announced previously by the company.
There’s probably more to come. The investors, who agreed to pay the money nearly a year ago, can now walk away from their commitments as Digital World missed its original September 20 deadline to merge with Truth Social.
DWAC is extending the deal deadline by three months after shareholders refused to approve its offer for a 12-month extension. But investors can still pull back.
This is just the latest issue for Digital World and Truth Social.
A key supplier complained last month that Truth Social’s bills were not being paid. A major web hosting operator said Truth Social owed about $1.6 million in contract payments, an allegation suggesting the operation’s finances are in “significant disarray”, Fox Business News reported.
In another setback, Truth Social’s trademark application was denied last month because its name sounded too similar to other operations.
Truth Social is not the juggernaut some investors were hoping for. The social media platform is largely a forum for Trump, who repeatedly posts bragging posts and reposts right-wing media articles praising him every day.
The comments in response mostly involve QAnon conspiracies, exaggerated pro-Trump and anti-Joe Biden memes, and grumpy comments like, “Ode to the greatest president of all time.”
The comments lack the back and forth from social media platforms like Twitter that make it more of a dialogue. Most negative comments on Truth Social are buried or disappear from the site, whose organizers promised it would be censorship-free.
Trump started Truth Social after being kicked off Twitter following the January 6, 2021 riot at the United States Capitol. Trump used the platform as he did Twitter – to rail at haters, complain about being victimized and falsely insist he won the 2020 presidential election.
Last month, Digital World warned in an SEC filing that a decline in Trump’s popularity could hurt the company. The filing noted that the success of Truth Social hinges on the “reputation and popularity” of the inquiry-ridden Trump, who chairs the Trump Media and Technology Group, which owns and operates the social media platform. .
“To be successful, TMTG will need millions of these people to register and regularly use TMTG’s platform,” the filing warns. “If President Trump becomes less popular or if there are new controversies that damage his credibility or people’s desire to use a platform associated with him,” the planned merger with Digital World “could be adversely affected” , he warned.
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