Truth Social gets a reprieve

Yesterday afternoon, a crucial shareholder vote returned a mandate to extend, for another year, a merger deadline for Truth Social. That means Trump Media Technologies Group (TMTG), owners of Truth Social, have one year to finish their merger with Digital World Acquisition Corporation (DWAC), a special-purpose merger specialist who has been involved with Truth Social from the start.

What Truth Social had on the line

DWAC faced a deadline this Friday (September 8) either to close its merger or extend it for another year. DWAC has 400,000 shareholders and has raised $300 million to help found Truth Social. If neither closure nor extension happened, DWAC would have had to liquidate its holdings in TMTG. That would be necessary to refund the $300 million to the shareholders.

The problem: most shareholders are small “retail” investors who bought shares out of loyalty to Trump. According to Forbes, most of those shareholders might not have understood the importance of the upcoming vote. The consensus among financial experts is that retail investors don’t pay attention to shareholder votes on abstruse, but vital, matters.

Bloomberg reported that this is the fifth such extension – though Axios said it was the second one-year extension.

DWAC needed 65 percent of shareholders to vote yes. So they began a heavy lobbying campaign to persuade shareholders to vote. Yesterday afternoon a sufficient number of Yes votes came in to extend the deadline. Shares of DWAC rose on the news, but not to its level at the announcement of the deal.

The Board of Directors of DWAC removed CEO Patrick Orlando, apparently because he failed to close the deal on time.

Only after the merger happens can DWAC transfer the $300 million to Truth Social for their use in expansion and user growth.

Exclusive venue

Donald Trump uses Truth Social exclusively for reaching the public, though the social medium has about 2 million registered users. With one exception: Trump shared his infamous Fulton County mug shot directly to X (formerly Twitter).

He had not used the account since its suspension on January 8, 2021. And he has not used it since.