We're not getting real estate, golf courses, or casinos this time. It's all about social media and technology. After being kicked off Twitter (TWTR) along with the failure of Parler, it was only a matter of time until Trump found a way back into the spotlight. My guess would have been through a television or streaming service and that still may happen, but what we're getting from the Trump Media and Technology Group first comes across as Twitter meets Facebook (FB) .
The value of the deal with Digital World Acquisition (DWAC) was up to $1.7 billion, which was $875 million for the enterprise value and an additional $825 million in shares based on performance. This gave the TMTG a total valuation of up to $1.7 billion. With shares trading near $50 as of this writing, that enterprise valuation is now over $5 billion (5 x $875M + $825M).
The whole idea here is free speech. The posts, whatever they may ultimately be, are being labeled TRUTHS, rather than posts, status updates, snaps, tweets, etc. Let's be honest here, no pun intended, I don't care what the platform, when it comes to any social media there will be plenty of lies, twisted truths, half-truths, and opinion. That has nothing to do with TMTG or Trump. That's a statement on social media in general. It sounds great for marketing, but if there isn't some moderation in place, aren't we simply going to end up with another Parler? Or if the goal is to be the anti-Facebook or anti-Twitter, won't we just end up with exactly what we have but on the far right instead of the far left?
In short, what problem does the new company solve? It doesn't fix Twitter or Facebook. It only compounds the problem. That doesn't excuse Facebook, nor does it excuse Twitter. Some of the accounts that are permitted to stay active on those platforms is downright ridiculous. I'm not a huge politics guy. I operate more as a centrist, leaning more conservative on fiscal policy and more liberal on social policy, but avoiding leaning hard one way or another, so when I look at social media platforms, I try to see what problem(s) they may be solving.
I haven't had the opportunity to review much on the deal because we don't have a lot of information out there outside of soundbites that criticize liberals. At the very least, the marketing angle and target audience is clear. The question I have is will this find advertisers? I would imagine some but in the early going, it will be dangerous for big name companies to put big dollars behind advertising on this platform. The company will draw $293 million in cash from DWAC but is it worth over $2 billion? My gut says no but I can't be certain until we get some SEC filings to review.
It's not shortable and there are no options, so you either buy or sit this one out. With shares up well over 300%, I'm sitting it out because we could rise or fall 50% by the close tomorrow form the current price. I kinda think we will. Hang on, this is going to be a crazy stock for some time to come.
