For the moment, investors seem wildly optimistic about the new media company Donald Trump is forming. Shares of little-known Digital World Acquisition Corp. (DWAC) soared 350% in one day after the shell company said it was merging with a new Trump entity aiming to build a social-media platform, a streaming operation and more.
That could be the peak, however. Trump obviously has a massive following, but it’s important to keep in mind that Trump’s popularity comes from his combativeness. He needs enemies and continuously adds new ones to his target list. His willingness to attack anybody who opposes him—and the mainstream political establishment most of all—is the source of his popularity among millions who think the system is corrupt and don’t care if Trump destroys it.
Trump’s war on mainstream culture is most effective when he wages it within the mainstream itself. He did this as president for four years, throwing thunderbolts from one of the loftiest platforms in the world. On Facebook (FB) and Twitter (TWTR), he trashed the very platforms that were hosting him, breaking their rules and daring them to punish him. The audacity and recklessness delighted his millions of followers.
Since losing his 2020 reelection bid, however, Trump has been badly marginalized. Facebook and Twitter now ban him, and the bully pulpit of the presidency now belongs to Trump’s vanquisher, Joe Biden. News organizations are far leerier of giving Trump airtime to spout lies about election fraud and vent his many grievances.
Trump obviously craves a new platform that will help him regain the spotlight. But “Truth Social”—Trump’s planned social-media site, according to the new company’s prospectus—won’t come close to matching the perch he had on Twitter and Facebook. By its very nature, Truth Social, if it ever materializes, will be a fringe platform for Trump, Trump followers and nobody else. It will be even less ecumenical than Fox News, which sometimes allows alternative views amid its rampant Trumpism.
An army of new social-media followers might stroke Trump’s ego, while providing a new vehicle for him to raise political donations he can use to further his role as Republican kingmaker. But Truth Social could also grow tiresome, fast. It will be little more than a Trump echo chamber, giving voice to Trump’s views and nothing more. Critics have already noted that the site’s terms of service require users not to “disparage, tarnish or otherwise harm … the site.” That means the site can ban or mute anybody who disagrees with Trump.
Looking past the obvious irony, that makes for a pretty boring operation. Twitter and Facebook allow and to some extent encourage disagreement, and disputes are one of the things that makes social media compelling. A glorified Trump blog, where all commenters agree with Trump, will not be. Trump will undoubtedly attack all the usual enemies, but he’ll be doing it from the sidelines. Instead of tearing down the mainstream from within, he’ll be tossing pebbles from outside.
Some big money behind it
Still, the new Trump company could be more serious than detractors are giving it credit for. Axios, for instance, declared a day after the announcement of the merger, “so far, this is a joke. This appears to be a shell company buying a shell company.” The CEO, Patrick Orlando, is a little-known financier who has raised money for several blank-check companies but so far failed to form one into a profitable business. The chief financial officer is a member of Brazil’s National Congress and an ally of “the Trump of the Tropics,” Brazilian President Jair Bolsanaro.
Yet the company has some serious money behind it, including funding by Barclays Private Bank, with an 8.4% ownership stake, and Highbridge Capital—a JPMorgan Chase hedge fund—which has a 5.4% stake. Another investing firm, Saba Capital, cashed out its take in the blank-check firm when it learned of the deal with Trump. Saba’s founder, Boaz Weinstein, contributed to Joe Biden and other Democrats in the 2020 election cycle, and his firm issued a statement saying that exiting the Trump media venture “was not a close call.”
Weinstein pulled his money before the stock soared, missing a huge gain. But his political preferences might turn out to be financially prudent, as well. Conservative social-media site Parler has struggled since its founding in 2020, especially when Apple and Google temporarily banned it from their app stores following the Jan. 6 riots at the U.S. Capitol. Trump would bring more star power to a site, but it’s quite possible Apple and Google could ban Trump’s site as well, if he continues to perpetuate lies about the 2020 election and tacitly or overtly urge his supporters to revolt. Again, Trump needs the mainstream—Apple and Google phones—yet his shtick by its nature may relegate him to the fringe.
Bloomberg’s Matt Levine points out that Twitter, which is now profitable, lost money every year for more than a decade after its founding in 2006. Could Trump’s site do better? Trump undoubtedly thinks so, and investors snapping up the stock seem to agree. As a public company, however, the Trump media venture will have to publish its finances, which means Trump can’t declare everything is fine if the facts prove otherwise—not even on Truth Social.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.