Truth Social is a social media platform in the same alt-tech field as Parler and Gab that was created by Trump Media & Technology Group to provide an “uncensored” alternative to platforms like Twitter. The startup has shown a decent performance since its launch, managing to rank quite high on some lists and in the Apple App Store for social media apps. But despite that, Trump’s Truth Social has faced some financial and regulatory problems this year, including multiple delays with a potential merger.
The most recent news about Trump’s Truth Social concerns the merger involving a special purpose acquisition company (SPAC). Just yesterday, a meeting was held to tally shareholder votes for extending the merger deadline by a year, but it came up short. The end result was Patrick Orlando, chief executive of Digital World Acquisition, extending the deadline for shareholder votes until November 3rd.
It is not the first time Digital World has extended the deadline. In the past month, the deadline has been pushed back three times, which has put additional strain on the deal. After all, if the yearlong extension is not approved before December 8th, Digital World might have to liquidate and return around $300 million to investors.
If the money is returned, Truth Social will likely find itself in a sticky situation since it needs funding to continue with its operations. Moreover, Digital World is already feeling the pain, with its shares dropping by over 7% yesterday.
But the latest extension is not the start of the startup’s troubles. Prior to the meeting and third delay, private investors started showing hesitance, with the group looking to negotiate for larger profits in exchange for following through on their commitments of around $1 billion.
There has also been news of Securities and Exchange Commission (SEC) and grand jury investigations, which have stalled the SEC’s approval of the merger. In fact, even if the deal is approved, the merger would still need to await SEC approval for things to move forward.
The stall has already hurt Truth Social, with around $138 million in capital being pulled out after a year of waiting for the SEC to sign off on the public offering. But that is not all. Truth Social also faces a lawsuit from a scorned business partner and reports of financial problems that make the potential loss of funding more serious.
Trump spoke out last month about potentially scrapping the deal to go public, instead using his own money to finance the startup. He did this through Truth Social, saying, “Who knows? In any event, I don’t need financing, ‘I’m really rich!’ Private company anyone???”
But it is hard to build something massive off a single person, even if they are as vocal and gung-ho as Trump. That is precisely what some people pointed out as they criticized the startup.
William Wilkerson, a senior vice president of operations at Trump Media who filed a whistleblower complaint in August with the SEC, said, “You don’t get to be a multibillion-dollar company with one message, a repeating echo chamber around one person, Donald Trump.”
Meanwhile, Elon Musk also gave his opinion, saying, “It [Truth Social] is essentially a rightwing echo chamber. It might as well be called Trumpet.”
Of course, social media statements and opinions do not mean much, especially when it comes to a business deal involving dozens of investors and a massive amount of money. Still, the negative news seems to be piling up, so it will be interesting to see where everything falls when the dust settles.
