For as much as Donald Trump resents the “lamestream” media, from now on he must benchmark himself against it. Over the weekend, the blank-cheque vehicle Digital World Acquisition Corporation, which plans to merge with the nascent Trump Media and Technology Group, announced that it had raised $1bn in fresh cash.
On Monday, the companies finally disclosed the details on Trump’s plans. This will be a Trump-themed Twitter and Netflix cross, offering mass-market viewership loyal to MAGA values.
In typical fashion, Trump offered some loose revenue projections, but details were scant. The companies provided neither expense estimates nor cash flow projections in a very expensive industry to grow quickly. Yet the current trading price of the Digital World Spac implies a value for Trump’s pending media empire of roughly $9bn.
TMTG will have two business segments. A microblogging website like Twitter called Truth Social and a streaming media service known as TMTG+. By 2026, Truth Social expects to have 81m users. Twitter has more than 300m today. A quarter of those Truth Social users will be “monetisable”, annually generating $13.50 each in advertising revenue.
The bulk of TMTG’s top line will come from charging $9 per month for its video service. The $9 per month sits between what Netflix and Disney Plus charge today. By 2026, Trump forecasts having 40m TMTG+ subscribers. Fox News, the incumbent voice of conservative politics in America, has recently launched its own streaming service. It has managed to sign up only 1m customers.
Apart from sketchy aggressive topline forecasts, shareholders should ask how much its technology and customer acquisition will cost. Streaming services and social media companies in early years have incinerated cash.
Wall Street has nevertheless given TMTG the benefit of the doubt. The $1bn Pipe, or private investment in public equity, raised from undisclosed parties as a starting point offers a formidable war chest. Shares of Digital World now trade at $40 — well above the $10 listing price. The Pipe shares are set to be sold at a premium to $10, an unusual structure for blank-cheque mergers.
Monday’s details reveal that any mania in Digital World shares is a boon for Trump himself. At current stock prices, TMTG could receive 40m extra “earnout” shares in Digital World, representing roughly a fifth of the company’s equity. If Trump really is a mainstream brand, he may well believe he rightly deserves this added bonus. More sceptical investors should ask why.
