'It’s wildly overvalued': Trump's Truth Social faces new scrutiny as his legal problems raise doubts
The Truth Social deal between Digital World Acquisition Corp. and Trump Media & Technology Group may have received a lifeline last week when shareholders approved an extension to finalize a pending merger, but now new questions are being raised about the future viability of the struggling social media platform.
With the extension last week, DWAC avoided a liquidation deadline that would have forced the company to return more than $300 million to investors, leaving Donald Trump with little to no income from the deal.
But, according to a new report from the Wall Street Journal, before the deal can conclude, "Trump Media needs regulators to approve financial statements documenting its recent business performance," which have been hidden from the public for two years.
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With that hovering over the deal, some analysts are skeptical about the value of Truth Social, which has never scaled the heights in sign-ups that were predicted and which has seen a precipitous decline in new users since 2020, dropping 50 percent.
According to Julian Klymochko, who manages a Special Purpose Acquisition Company (SPAC) focused fund at Accelerate Financial Technologies, the lack of information at this late date should set off alarm bells.
“It’s wildly overvalued…We just haven’t seen anything by way of revenue, users on the platform or anything else,” he stated. “It’s extremely difficult to judge how viable this actually is.”
Add to that Trump's involvement in the project, its major selling point, is under a cloud as he faces criminal indictments in four separate jurisdictions – and could face prison time.
The Journal is reporting, "Digital World acknowledges the risks the merger faces. The company has said in regulatory filings that Trump’s legal issues could damage his reputation, distract him from the business or force him to resign as chairman."
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Pressed on the difficulties the merger is facing, a spokesperson for Trump Media was less than forthcoming and snapped at the Journal's Amrith Ramkumar and Keach Hagey.
"Trump Media spokeswoman Shannon Devine declined to comment about Truth Social or the deal. She said The Wall Street Journal’s questions 'range from knowingly false absurdities to malicious, defamatory falsehoods.' She didn’t respond when asked what questions contained falsehoods," the Journal reported.