Valuation slides at Donald Trump’s Truth Social network

The company that operates Truth Social reached a valuation of $15bn (€15bn) in October 2021. It is now valued at just over $2bn.

Truth Social was co-founded by Donald Trump after he was banned from Twitter Photo: AP / Mary Altaffer

Trump Media & Technology Group (TMTG), which operates the Truth Social app co-founded by the former US president Donald Trump after he was banned from Twitter, reached a valuation of as much as $15bn (€15bn) in October 2021.

The company’s investors scrambled to buy shares in Digital World Acquisition Corp, the special purpose acquisition company (Spac) that signed a deal in October to take TMTG public. Digital World's shares rallied as much as 1,650% that month, making it the most valuable Spac of all time.

A year later, Digital World shares have shed most of the gains as regulatory and potentially criminal investigations weigh on the prospects of its deal with TMTG, now valued at just over $2bn.

"To be perfectly honest, I treat it like a casino," said one of its investors Tony Alvarado, a 44-year-old call centre customer service manager from Orange County, California.

Individual investors, which comprise about 90% of Digital World's shareholder base, have suddenly become an obstacle to the deal with TMTG being completed.

Digital World has not been able to get enough of them to vote for an extension of its life by 12 months, which it says it needs as it waits for the US Securities and Exchange Commission to complete a review of the transaction.

The challenge has been to get shareholders to cast their votes rather than convincing them to vote in favour. Digital World's shares, which closed at $22.40 on Monday, will each return $10.30 to shareholders if the Spac liquidates, so a 'no' vote would go against their financial interests.

But while individual investors are adept at using apps like Robinhood to buy shares, many are not as accustomed to voting their shares.

Alvarado said he had not heard about the shareholder vote before a September 6 deadline. He added he had become disillusioned with the stock after he was left with only $200 of his original $872 investment. "Once you've already lost 77% of your investment, it's easy to lose interest," Alvarado said.

Digital World and TMTG representatives did not respond to requests for comment. The deal's woes have rattled Trump's supporters who bought into Digital World because of him.

"I've lost $154,000 this year, and I'm down 85% on my remaining life savings. I'm still not giving up but it hurts really, really, badly," one Reddit user describing themselves as an "honorable disabled veteran" posted on the platform.

- Reuters