Trump’s New Social Media Startup Reportedly Got Its Money From Shady ‘Blank Check Company’ Dealings

Interest in retail stocks have had a fascinating impact on the rest of the stock market in 2021. A company like AMC, for example, saw itself saved from potential bankruptcy as retail traders embraced the theater chain along with embattled companies like GameStop. Cryptocurrency and other fad trading trends have seen boom and bust cycles that have befuddled more traditional players in the market and caused unease, and it appears that Donald Trump hopes similar interest can help his social media startup.

Trump is apparently making good on his promise to start a social media company of his own, known as Truth Social. And while the groundswell of stock price for that company made headlines on Thursday, skeptics of the company behind the platform noted that the out-of-nowhere news that Trump Media and Technology Group even existed came from some sketchy deals. As the Wall Street Journal detailed on Thursday, the sudden emergence of a Trump property on the trading markets is a result of a special-purpose acquisition company, or SPCD.

Also called a blank-check company, a SPAC such as Digital World Acquisition is a shell company that raises money and trades on a stock exchange to merge with a private firm such as Mr. Trump’s and take it public. The private company then replaces the SPAC in the stock market. SPAC mergers have become popular alternatives to traditional initial public offerings, especially for startups that can make business projections. Those aren’t allowed in typical IPOs.

The SPAC move is technically legal, but seen by some as a bait-and-switch of sorts. And certainly one Trump used to his advantage to get investors in a company that only exists because more traditional platforms like Facebook and Twitter have deemed him too dangerous to use their platforms.

As the New York Times reported on Thursday, Trump managed to use a SPAC to bankroll TMTG in a climate where Wall Street and investors have generally considered the twice-impeached former president toxic in the wake of the January 6 riot in Washington. The use of a SPAC meant that some investors didn’t even know Trump’s company was the recipient of their money.

Mr. Trump’s new company, Trump Media and Technology Group — incorporated in Delaware in February with little fanfare, and with no revenue or tested business plan — reached a deal to merge with Digital World on Wednesday.

Digital World, which was set up shortly after Mr. Trump lost the 2020 election, last month raised nearly $300 million, largely from big investors. Assuming the merger is consummated, that money will soon be bankrolling the Trump media venture, which plans early next year to offer a Twitter-like social media app.

Shares of the newly merged company soared on Thursday, rising more than 300 percent to close at $45.50 a share and partly reflecting expectations that the former president’s media company could be very profitable.

Meanwhile, Snapchat saw its stock price tumble after missing Q3 projections like, you know, a real company. We’ll have to wait and see if Trump’s platform ever gets to that point, though.