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zuul

(14,628 posts) Tue Apr 4, 2023, 11:00 AM Apr 2023

TFG's Net Worth Plunges $700 Million As Truth Social Flops

https://www.forbes.com/sites/danalexander/2023/04/03/trumps-net-worth-plunges-700-million-as-truth-social-flops/?sh=1376e0804c64

In October 2021, Donald Trump was eager for revenge. Nine months earlier he had been banned from Twitter, depriving him of his primary means of communicating with his followers. His solution? Build his own Twitter. Dubbed Truth Social, it had the potential to boost Trump’s fortune by billions. As soon as he announced the plan, supporters piled into Truth Social’s special purpose acquisition company, or SPAC. Shares of the SPAC, Digital World Acquisition Corp., shot up from $10 to $175 in two days, implying that the business was worth $22 billion, his interest amounting to $19 billion.

The hype never lined up with reality. In December 2021, a group of big-money investors promised to inject $1 billion in cash into the venture—but only if they got a sweetheart deal. By that point, shares were trading for $45 on the open market. But under the agreement, the new investors would be guaranteed a profit as long as the shares stayed above $10. When previously estimating the value of Trump’s stake, Forbes used that $10-per-share figure and came to $730 million.

But things have changed. Even Trump’s die-hard fans are not as excited by Truth Social as they once were. The Department of Justice, Securities and Exchange Commission and Financial Regulatory Agency are all examining the venture, looking at things such as trading activity and communications between the SPAC and Trump’s business. Meanwhile, the SPAC, which fired its chief executive last month, only has until September 8 to complete the merger. Further complicating matters, Elon Musk bought Twitter in October, and promptly reversed the ban on Trump and other right-wing figures. That undermined the case that the world needed a more conservative version of Twitter. Today, shares of Trump’s SPAC are 92% off their highs, trading at $14 apiece, a level that suggests the former president’s business is worth $1.2 billion.

That still seems absurdly high. The fundamental problem is that barely anyone uses Truth Social. Before it launched, an investor presentation suggested the app would attract 81 million users by 2026. Now, over a year after going live, it has only an estimated 5 million. Given that Trump owns roughly 85% of the business and Twitter is worth an estimated $42 per user, the former president’s stake probably adds up to about $180 million today. The drop helped push him 205 spots lower on the 2023 World’s Billionaires list, to No. 1,217.