Donald Trump’s legal problems are still piling up, but he may be about to see a cash influx. At long last, after months of delays, the Trump Media & Technology Group (TMTG) may be about to merge with blank check partner Digital World Acquisition Corp (NASDAQ:DWAC). The parent company of Trump’s social media platform, Truth Social, has unsuccessfully tried for years to complete the merger. Regulatory probes and ongoing requests from its partner to push back the vote have risen to block it. But tomorrow, March 22, marks the shareholder meeting, and the mission will finally be voted on. If it passes, DWAC stock will cease to exist, and TMTG stock will trade in its place.
The closing of this deal would sufficiently enrich Trump, who holds roughly 79 million shares of TMTG. Given the steep legal fees he’s facing, this cash would be much needed. But even if the merger would line his pockets, that doesn’t mean the new TMTG stock will be a good buy.
DWAC Stock or TMTG Stock: A Loser Either Way
Even as the merger vote looms, DWAC stock is mostly trending downward. Despite some slight momentum this morning, shares remain highly volatile and haven’t been able to stay on an upward trajectory. For a special purpose acquisition company (SPAC) on the verge of a merger vote, that’s a bit unusual. But for investors, the takeaway should be that the market has no faith in Trump and the stock’s success or failure is entirely dependent on him.
InvestorPlace has reported that experts believe that being tied to Trump can’t save DWAC stock. Despite his early success in the Republican primary elections, shares have struggled over the past month. Even the merger isn’t likely to change that, given his current standing. A newsletter from political strategist Simon Rosenberg reports that his Democratic opponent, President Joe Biden, currently leads Trump in six new polls, citing recent data from FiveThirtyEight. The general election is still months away, but as it stands, Trump’s prospects look questionable at best. If he loses, there will be nothing to keep a stock like TMTG elevated.
Ongoing Litigation Haunts DWAC and TMTG
There are also other problems to consider that are approaching more quickly. According to The Washington Post, the merger may be facing legal problems as several former Truth Social insiders maneuver against Trump in a lawsuit that could compromise his grasp on the company. As the outlet reports:
“The litigation won’t stop Friday’s shareholder meeting, during which Digital World has said it will announce whether a majority of investors voted to approve the merger. But the hundreds of pages of legal filings in the four cases offer clues to answers for some long-running questions about the companies’ inner workings and expose details of the turmoil that has characterized efforts to create a pro-Trump internet empire.”
Even if this does delay the merger vote at tomorrow’s shareholder meeting, however, it does seem to be helping push down DWAC stock on a day that shares should be rising. Investors should keep this in mind regardless of how the shareholder vote swings tomorrow. DWAC stock had too many ties to Trump to make it a good buy, and TMTG stock won’t be any different.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
