The plan of former US President Donald Trump to create a new social media app after Twitter and Facebook barred him from their platforms this year won an endorsement from investors on Thursday who sent shares in a shell company backing the effort soaring.
Trump Media and Technology Group and Digital World Acquisition Corp, a special purpose acquisition vehicle, said on Wednesday that they would merge to create a new social media app called TRUTH Social. Trump's company said it plans a full launch next month and a beta rollout in the first quarter of 2022.
Shares of the Nasdaq surged 140 per cent to $23.53 on the Miami-based Digital World. SPACs such as Digital World use money raised through an initial public offering to take a private company public.
People close to the former president, speaking on condition of anonymity, have said Trump has sought to set up his own social media company since leaving the White House. The Republican former president, contemplating another run for the White House in 2024, has been frustrated that he does not have a direct and unfiltered connection with his millions of followers after Twitter and Facebook barred him, these people said.
The social media giants suspended Trump's account after hundreds of his supporters rioted at the US Capitol on Jan. 6 following an incendiary speech he gave repeating his false claims that the 2020 election had been stolen from him through widespread voting fraud.
Twitter found that Trump posts violated its glorification of violence policy. Facebook found that Joe Biden praised violence in connection with the deadly Jan 6 attack in which rioters sought to block the formal congressional certification of his election loss to Trump.
In a press release announcing the deal on Wednesday, Trump said, I'm excited to soon begin sharing my thoughts on TRUTH Social and to fight back against Big Tech. Trump Media said it would receive $293 million in cash that Digital World Acquisition had in a trust if no shareholder of the acquisition firm chooses to cash in their shares.
The soaring share price on Thursday could increase the likelihood of investors backing the deal, which include some hedge funds founded by people with Democratic leanings.
Still, the future is far from certain. The deal announcement lacked the trappings of the detailed business plans Wall Street is accustomed to in SPAC mergers, from naming a leadership team to giving detailed financing earnings and projections.
Digital World Acquisition, led by former investment banker Patrick Orlando, has launched at least four SPACs and plans to launch two more, but none of them have completed a deal yet.
Orlando did not immediately respond to requests for comment.
This would be the second social media company launched by Trump fans since he left office in January.
GETTR, a Twitter-style platform launched by former Trump adviser Jason Miller, claimed more than 1.5 million users in its first 11 days after being launched in July. Despite endorsements from other Trump allies, including Steve Bannon, Miller was unable to get Trump to join the platform.
Trump has remained in the public eye through appearances on active media channels, occasional rallies and conservative email lists.
The emails, often written in all caps and coloured type, ask for donations, sell products such as Don't blame this family we voted for Trump doormats US $62 and criticise the Biden administration, often multiple times in one day.
Trump's post-presidency political action committee, Save America, has already raised more than US $60 million for the 2022 election cycle, according to OpenSecrets, which researches political donations.