The news last week that former President Donald Trump is launching his own social network reverberated around the world.
While in office, Trump was notoriously outspoken and active on Twitter (NYSE: TWTR). It gave followers and foes direct access to his thoughts and helped him earn endless column inches in the global press. After his controversial Twitter ban and subsequent exit from ruling the United States, he’s been largely out of mainstream media.
It makes sense then, that Trump announced last week that he was launching his own social network and TV streaming service.
Why is Donald Trump launching his own social network?
Trump thrives on power, and this lack of control over the media is something he’s often vowed to fight. His claims of ‘fake news’ are infamous, and now he’s launching a media and tech company with his very own social media network called ‘TRUTH Social’ along with a subscription video-on-demand service.
On Thursday, 21 October, a special purpose acquisition company (SPAC), Digital World Acquisition (NASDAQ: DWAC), was announced as the vehicle of choice to take Trump Media and Technology Group (TMTG) public.
After the announcement, shares in DWAC went parabolic, surging over 350% in the day. The following day the trend continued, with DWAC up another 200% at its peak. It closed the day at $94.20 – a sensational rise of 845% since the day before the announcement.
In a press release announcing the move, former President Donald Trump said:
“I created TRUTH Social and TMTG to stand up to the tyranny of Big Tech. We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable. Trump Media & Technology Group’s mission is to create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America.”
Will Donald Trump run for president in 2024?
Many believe this is a precursor to a second run for office. Trump did not leave the presidency willingly and still has a large follower base in the country.
While the United States stands for free speech and freedom, there is a strong sense of fear that Trump’s media company will further polarise an already fragmented society.
TRUTH Social is expected to launch a beta version next month, followed by a full rollout in Q1 next year. Independent Political news site, The Hill, released survey results showing 30% of respondents would use a Trump-backed social media platform, 54% said they would not, and 16% would consider it.
After the January 6 storming of the US Capitol and prior to President Joe Biden’s inauguration, Trump was banned from Twitter, Snapchat (NYSE: SNAP), Facebook (NASDAQ: FB), and YouTube. Twitter was the biggest blow to his ego.
The Big Tech ban caused an outcry as even many anti-Trump critics thought it a step too far. And when the free speech social networking app Parler was removed from Apple and Google app stores, the criticism surged.
Fuelled by FOMO
With a three billion dollar market cap and considerable news coverage DWAC stock has captured the attention of meme-stock traders and FOMO (fear of missing out) is rife.
As Bloomberg noted at the weekend, this could rapidly boost the flagging fortunes of the former President. It is believed Trump will own over 50% of the combined media company.
According to the Bloomberg Billionaires Index Trump is worth around $2.5 billion. Therefore, the continued SPAC frenzy could make him richer than he’s ever been.
Since vacating The White House, speculation that his fortunes are dwindling is rife. But that could all be set to change on the back of him regaining a sense of power through his media endeavors.
Not everyone sees it that way though. SPAC ventures are notoriously volatile and prone to sharp share price declines after an initial spike in interest. Considering the financials and path to profitability are light on detail, this particular SPAC appears to be driven on little more than hype and speculation. In any case, it’s certainly going to be an interesting space to watch.