Digital World Acquisition Corp. (DWAC), the Donald Trump-backed shell company angling to take the former president’s social media platform Truth Social public, has run into yet more trouble. The corporation has been warned it is in danger of being delisted from the NASDAQ stock exchange.
DWAC hasn’t paid all of the necessary fees to keep itself posted on the stock market, according to a Securities and Exchange Commission document filed Wednesday. Because the company has defaulted on its payments, Nasdaq notified DWAC it would be delisted without an appeal. Today’s filing confirms that the shell corp is going through with that appeal process.
“The Company has elected to file an appeal of this matter, pay the corresponding fee, and plans to pay any fees The Hearing Department determines are due,” the SEC document says.
The threat of delisting is just the latest problem to plague the Trump-associated “blank check company” on its mission to merge with and raise money for Truth Social.
The special purpose acquisition company launched as a publicly traded company in October 2021 with the intent of acquiring and funding Truth and the broader Trump-affiliated media company, Trump Media & Technology Group (TMTG). Through the SPAC acquisition, the media company and social platform would gain the benefit of stock market investment, but be sheltered from many of the transparency and reporting disclosures generally required to be a public corporation.
Yet soon after the intended merger was announced, the SEC, Department of Justice, and a federal grand jury all launched investigations into the deal. The probes are largely concerned with the timing of the merger discussions, relative to when DWAC went public. Under federal law, companies can’t discuss such acquisitions prior to an initial public offering.
Amid all the investigations, DWAC can’t complete its intended acquisition of TMTG. The company has had to repeatedly extend its deadline for the merger, and has struggled to maintain shareholder support as the deal drags on. The shell corp has lost more than 84% of its total stock value over the past year, even despite a value bump following the announcement of Trump’s 3rd presidential run. Clearly, the company has been financially floundering. In September 2022, DWAC downgraded its official address from an office space to a Miami post office box.
Truth Social itself has also not been doing so hot. It briefly experienced a jump in users and downloads following the FBI raids on Trump’s Mar-a-Lago home in August, however download numbers have since fallen back down to below 200,000 per month, according to Statista. That’s compared with more than 40 million estimated Twitter monthly active users in the United States.
Trump founded Truth Social in the aftermath of his blanket bans from larger social media platforms, following his role in inciting and encouraging the January 6, 2021 U.S Capitol riots. Yet recently, those bans have ended and Trump’s accounts have been reinstated on Facebook, Instagram, and his perennial favourite: Twitter. Yet a restrictive exclusivity clause in his TMTG contract means he is required to prioritise Truth over all over sites. Though, the former president (and once again presidential hopeful) will be freed from that TMTG agreement in June, and is reportedly eager to get back to his tweeting roots.
If the looming Nasdaq delisting doesn’t do it, then a Trump departure from Truth could easily be the nail in the coffin for the DWAC/TMTG merger saga. Without Trump, his social platform only has his biggest fans. And what are they without the blowhard himself?