Inside The Trump SPAC: All the TMTG Updates
A full analysis of Trump Media & Technology Group's NASDAQ listing
There’s quite an admission in the plan to float Donald Trump’s media company if you know where to look. Potential investors are told in its latest prospectus that The Trump Media & Technology Group (TMTG) does not and may never disclose key performance metrics.
Sign-ups, ad impressions and average revenue per user stats, common measurements for listed and non-listed media companies, may not be recorded or disclosed because such an exercise “might not align with the best interests of TMTG or its shareholders”.
Why? Because it could “lead to short-term decision-making at the expense of long-term innovation and value creation”.
Instead, management has argued that the business is more focused on building innovative features and technologies.
The issue is further addressed in the risk section of the prospectus (known as an S-4 filing) tabled by Digital World Acquisition Corp (DWAC), the listed special purpose acquisition company TMTG plans to merge into.
“While many industry peers may gather and report on these or similar metrics, given the early development stage of the TMTG platform, TMTG’s management and board has not relied on any particular key performance metric to make business or operating decisions,” the document states.
“Concurrent with expected access to new capital and resources following the Business Combination, TMTG is actively evaluating the most relevant, reliable and appropriate key operating metrics that align with its evolving business model.
“At this juncture in its development, TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business.”
So when the combined entity goes live on NASDAQ, with the ticker symbol DJT, how should potential investors compare it to the likes of Meta, Reddit, X (formerly Twitter), Snap and YouTube?
All of these companies disclose either their monthly or daily active users and typically provide an average revenue per user (ARPU) metric.
This was important information for the Reddit IPO, with the company reporting a slightly higher ARPU than Snap ($3.42 versus Snap’s $3.29).
As it stands, we have to rely on projections from the company about its own user base growth.
Namely, TMTG expects Truth Social to hit 10 million users at the end of 2024, climbing to 20 million users in 2025, according to a December presentation. Revenues will hit $17.5 million in 2024, surging to $173 million in 2025.
Bearing in mind that the company only spent $970,000 on sales and marketing in 2023, these internal assumptions are based on a scenario after TMTG receives DWAC funding following the merger,
As for Truth+, an on-demand “non-woke” streaming service which will take on Netflix and Disney, TMTG expects its user base to grow to two million after its launch next year, doubling to four million in 2026. Revenue will apparently hit $26 million in 2025, then $312 million in 2026.
These numbers are a far cry from where the company was last year. TMTG had sales of just $3.3 million at the end of 2023, booking a net loss of $49 million.
Executives and Board
At the same time, TMTG’s CEO Devin Nunes, a member of Trump’s transition team and Chair of the House Intelligence Committee between 2015 and 2019, earnt a salary of $750,000. His CFO Phillip Juhan brought in $337,500 and Chief Operating Officer Andrew Northwall had a salary of $365,000.
The combined entity will have some other notable appointees:
Donald Trump Jr. (proposed Board director) – Eldest child of the former President, who has become a political commentator and author in his own right. He serves as Executive Vice President of the Trump Organization.
Linda McMahon (proposed independent Board director) – WWE co-founder and Trump’s former Administrator of the Small Business Administration. McMahon reportedly owned just under 1% of shares of WWE before it was acquired by Endeavor and merged with UFC parent company Zuffa into TKO Holdings in what was a $21 billion deal.
Kash Patel (proposed Board director) – Republican and Trump loyalist who served as an aide to Nunes and as a US. National Security Council official.
Robert Lighthizer (proposed independent Board director) – Florida-based trade lawyer who served in the Trump administration between 2017 and 2021. Lighthizer’s ‘No Trade is Free’ book, first published in August 2023, called for a break with China and more protectionist policies in a bid to bolster the US’ manufacturing base and counter the globalisation trends of the past decades.
Background and Proposition
TMTG’s main business proposition is that it plans to leverage the Trump brand to build a media and technology “powerhouse” to counter a supposed suppression of conservative free speech. The company was incorporated in Delaware on 8 February 2021, just weeks after Trump left the White House.
The initial merger agreement between DWAC and TMTG was entered into in October 2021, later to be amended in May 2022. Truth Social, TMTG’s first product, launched on the Apple Store in February 2022 and had its global roll-out in June 2023, going on to rival other right-leaning platforms including Gettr and Parler.
But another alt-tech platform, Telegram, has since flourished, attracting hundreds of millions of users and reportedly eying up an IPO of its own.
Another substantial development over the period has been Elon Musk’s acquisition of Twitter in October 2022, which has effectively taken some heat out of the claims that the site censors right-leaning views.
After some delays, TMTG now has the green light to merge with DWAC and use some of the cash to:
Invest in marketing and advertising
Accelerate user growth
Drive user engagement
Development and adapt revenue models
Launch additional product lines
Who Benefits?
President Trump has more than 78 million shares (a 58% stake) in the company, which would amount to around $3 billion if they remain at their current price of $36.9 per share. But these are locked-up for six months.
Patrick Orlando’s ARC Global Investments II holds 10 million shares (Orlando was ousted as DWAC CEO in March 2023) and United Atlantic Ventures holds 7.5 million shares in the company.
United Atlantic Ventures was formed by Andy Litinsky and Wes Moss, two former contestants of The Apprentice who helped co-found TMTG. They are battling Trump in the courts over the SPAC, claiming that the former President has attempted to dilute their share holdings.
Trump Media has denied the claims, while a judge has recommended putting the shares in an escrow account so they can be handed over to the winner of the case following the merger of TMTG and DWAC.
Notably, Susquehanna International Group has 605,671 shares in DWAC, as of the end of 2023, amounting to $22 million at the current share price. Jeff Yass, a Republican mega-donor, is a co-founder of the firm, which also took an early stake in TikTok owner ByteDance in 2012.
The Chinese-headquartered company is now facing pressure from US lawmakers to divest its American subsidiary over national security concerns after the House of Republicans voted in favour of such a move.
UPDATE (25/03/24): TMTG will go live on NASDAQ on 26 March. Susquehanna has also issued this statement: “Susquehanna is a market maker and has zero economic interest in Trump Media. The firm’s long position is offset by short positions of the same size.”
UPDATE (1/04/2024): TMTG reveals new financial metrics: The business lost $58 million in 2023, against revenues of just $4.1 million.
UPDATE (15/04/2024): TMTG is now trading around $26 per share as Trump’s ‘hush money’ trial begins. Not only is the former President in court, but the company says it wants to issue 21.49 million new shares, which would dilute current shareholders.
🤔 Other tech and media news I’ve found interesting
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Mega US local news publisher Gannett plans to cut down the costs its spends on wire services, namely The Associated Press (AP). It will stick with the AP for election coverage, but it’s signing with Reuters for its international news wire service.
OpenAI is reportedly pitching its generative AI video product, Sora, to Hollywood studios, according to Bloomberg. The sales campaign comes after a clip emerged of Mira Murati, chief technology officer of OpenAI, trying to evade questions about Sora’s training data, including whether it used content from Google-owned YouTube or not.
BuzzFeed’s Q4 earnings will be released tomorrow. Is there any blue sky for Jonah Peretti’s company?
Insurgent British broadcaster GB News has got slapped on the wrist by media watchdog OfCom. Its crime? For allowing serving politicians to read news items. In a digital world, are the regulations just out of date?
The Sun’s Editor Victoria Newton was on the BBC’s Laura Kuenssberg Show over the weekend claiming her readers were undecided whether to back Labour under Sir Keir Starmer at the next general election.
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