Donald Trump is fighting to get his media company off the ground and into public markets, but Tesla CEO Elon Musk keeps getting in his way with his effort to buy Twitter (TWTR).
Shares of Digital World Acquisition Company (DWAC) — the blank-check company aiming to merge with Trump’s Truth Social — dropped over 4% on Tuesday on the news that Musk was reversing course and planned to purchase Twitter for $44 billion after initially trying to back out of the deal in July.
Tuesday’s decline is just the latest setback for Trump. The Trump Media & Technology Group (TMTG), which operates Truth Social, has confronted a range of obstacles in recent months. Those include a Securities and Exchange Commission probe into possible wrongdoing; reported financial troubles within the company; and an ice-cold special purpose acquisition company (SPAC) market.
And that all came before Elon Musk filed a letter Tuesday seeking to buy Twitter on the original terms he agreed to, reviving questions about whether Trump and other conservatives will flock back. The Tesla (TSLA) CEO has signaled his inclination to allow posting with little controls such as fact-checking or consequences for expressing hateful views if he runs the company.
While Trump has repeatedly said he won’t return to Twitter, many doubt his word. In a note to investors this week, MKM Partners predicted he'd return. Kevin Roose at The New York Times also anticipates Trump will come back to Twitter almost immediately, "no matter how much fun he's having on Truth Social."
If Trump does go back to tweeting, his presence could severely undercut the Truth Social app, which the former president currently uses as his online megaphone. Trump's return could also spell trouble for other conservative social media sites that have emerged since mainstream outlets banned the former president on the grounds that he incited the Jan. 6, 2021 attack on the Capitol.
The outlook for DWAC, which aims to merge with Trump's Truth Social, looks particularly bleak. DWAC's 52-week-high hit $175, but the stock was trading Wednesday at around $17 a share. Meanwhile, shares of Twitter have surged on the news of Musk's plans, ending Tuesday up 22%.
‘Vote keeps marching on’
This week’s news also comes on the eve of a crucial deadline for Trump’s SPAC effort. In September, the company faced a setback when it failed to gain the necessary votes to delay its planned merger to 2023. The company gained a four-week reprieve that ends with a shareholder meeting set for Oct. 10.
The SEC is investigating whether Trump’s company illegally negotiated with DWAC before the blank-check company went public; DWAC says the SEC needs to resolve its probe before the deal can go through.
Digital World CEO Patrick Orlando remains outwardly optimistic that Trump's company will ultimately reach the public markets, suggesting that vote gathering efforts were making progress. “Vote keeps marching on — new voters every day!!" he wrote in a Truth Social post Tuesday.
DWAC had previously said in a securities filing that a failure on this vote to get a delay would mean it would likely "be forced to liquidate."
Will Trump himself come back to Twitter?
The overhanging question is, of course, whether Trump will come back to Twitter if invited.
Musk signaled in May he would ask him to come back, calling the Trump Twitter ban a “morally bad decision” that was “foolish in the extreme.” Musk’s ties to the GOP have also deepened throughout 2022, with the Tesla CEO even appearing at a Trump-aligned fundraiser in August.
A return to Twitter might hurt Trump’s bottom line, but nevertheless, he might be tempted to broaden his reach. While Trump only has 4.14 million followers on Truth Social, he amassed 80 million on Twitter before he was banned and had a much more engaged audience.
So far, the former president hasn’t reacted to Musk’s latest news. His Truth Social account has instead focused on allegations that he mishandled classified documents since leaving office. Musk has also been vague in his plans for the site, only saying so far he wants to build “the everything app” with Twitter.
Buying Twitter is an accelerant to creating X, the everything app
— Elon Musk (@elonmusk) October 4, 2022
Ben Werschkul is a Washington correspondent for Yahoo Finance.