Why Donald Trump's Truth Social platform is in trouble

Donald Trump is having a tough time of it.

He has been indicted more times than we've had hot dinners, is facing a trial over alleged election interference, and now his favourite social media platform might be in big trouble.

Indeed, a deal to take his platform Truth Social public faces a big test next week that could determine whether it becomes a multibillion-dollar company or flop.

Under the terms of the deal, announced in October 2021, Trump’s Trump Media & Technology Group was destined to merge with Digital World Acquisition Corp (DWAC), a special-purpose acquisition company, or Spac.

But shareholders in Digital World are now being asked to give the company another year to complete the deal to prevent DWAC's dissolution. If they refuse to do so at a meeting on 8 September, Digital World will be required by law to liquidate and return $300 million to its shareholders, leaving Trump’s company with nothing from the deal.

Deadlines for closing the deal have already been extended five times. Digital World is facing warnings from the Nasdaq stock exchange that its shares could be delisted over a reporting issue.

Jay Ritter, a University of Florida finance professor, told the Washington Postthis week that the merger has “been pretty much unprecedented in terms of all of the glitches”.

“The deal does seem to be running out of time," he added. "You can’t just keep getting extensions forever.”

It comes after a string of problems with the deal. When it was announced, there were allegations that the company began its conversations with the former president’s company before they were permitted under SPAC rules.

Meanwhile, its chief executive was later terminated by the board, a former board member was arrested on charges of insider trading, and the company agreed to pay an $18 million settlement to resolve charges that it had misled investors and given false information to the Securities and Exchange Commission.

But Trump Media has blamed regulators for the deal’s delays. Last year, it accused the SEC of working to “sabotage” the merger, telling the Washington Post that agency had tossed “the matter into a bureaucratic black hole of inaction” and violated its own charter.

There are estimated to be about 2 million users of Truth Social. Meanwhile, Facebook has 2.9 billion, YouTube has 2.5 billion, WhatsApp has 2 billion, Instagram has 2 billion, and X, formerly Twitter, counts about 541 million users.

Poor old Trump...

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