TRUTH Social: Everything you need to know about DWAC and TMTG

When will TMTG merge with DWAC?

Digital World Acquisition Corp (DWAC) is a blank-cheque company that went public in September 2021 at $10 per share.

The SPAC then agreed in October to merge with Trump Media & Technology Group (TMTG). However, no firm date has been set as to when the merger will be completed but it is expected to be done and dusted within the next couple of months.

How much is TMTG worth?

The combination with DWAC gave TMTG an initial enterprise value of $875 million when the deal was unveiled in October. It said, when an additional potential earnout worth another $825 million is taken into account, that the valuation could be as high as $1.7 billion depending on how the share price performs after the combination is complete. However, it has since raised a further $1 billion from follow-on PIPE investments.

Markets have moved early to gain exposure (on the assumption the deal will complete) by buying DWAC shares before the combination is completed and have slapped a huge premium on the business more. Today, DWAC boasts a market cap of over $2.6 billion, although the stock remains highly volatile.

How much money will TMTG have?

TMTG has said the merger with DWAC and the follow-on PIPE investment will supply it with $1.25 billion to fuel its ambitions. That will be made up of the $293 million in cash collected by selling shares in the DWAC SPAC and $1 billion from follow-on PIPE investors.

What does TMTG do?

TMTG is chaired by former US president Donald Trump, who has had a complicated relationship with social media companies. Twitter was his direct channel of communication with voters during his tenure in the White House, but he was then ‘permanently suspended’ by the platform following what it described as the ‘horrific events’ of the Capitol riots in January 2021. Snapchat has also banned Trump, while others like Facebook and YouTube also threw him off their platforms but left the door open for him to return one day.

This has sparked a battle between the mainstream social media companies and Trump, who believes a new type of rival is needed. TMTG’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.’

The weapon of choice for TMTG is a new social media platform named TRUTH Social. The company has said the platform, which is expected to operate in a similar style to Twitter, will be launched in the first quarter of 2022, but some reports have pencilled in February 21 based on listings made on Apple’s App Store, where it is available for pre-order (it is not yet on Android). The beta programme was launched last November. In more toned-back language, the sign-up website claims the platform will be ‘America’s “Big Tent” social media platform that encourages an open, free and honest global conversation without discriminating against political ideology’.

TMTG also intends to launch a subscription video on demand service named TMTG+, which will feature ‘'non-woke' entertainment programming, news, podcasts, and more.’ Scott St John, who was the executive producer of hit TV shows including Deal or No Deal and America’s Got Talent, will lead the video unit. This will sit alongside its TMTG News segment.

How will TMTG make money?

The exact business model TMTG operates is still unclear, but it safe to assume that the social media platform will run like the mainstream players – free to use and driven by advertising. It will supplement this with subscription revenue from TMTG+.

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What is TMTG’s strategy?

The basis of the offering TMTG has compiled is simple - it wants to provide the first real alternative platform to rival the monopoly held by Big Tech companies.

It wants to provide a home for those that have had their posts removed, their content taken down, or their accounts suspended by mainstream platforms and relax the rules that some conservatives believe are infringing free speech. The primary charges that TMTG has laid at the door of mainstream social media companies is that they silence conservative views while facilitating extreme leftist ones and what it describes as ‘cancel culture’.

‘Unlike with the Big Tech platforms, there will be no shadow-banning, throttling, demonetizing, or messing with algorithms for political manipulation. We will not be treating users like lab rats for social experiments, or labelling alternative views as “disinformation.” We will not silence our fellow citizens simply because they might be wrong—or worse, because we think that Americans “can’t handle the truth”,’ said Trump last October.

There is evidence that there is room for new social media platforms. Conservative-leaning social media app Parler was briefly the most-downloaded app around the world last year while Rumble, a new rival targeting YouTube’s audience (including many who have their videos blocked on the site), has seen its user base grow to 36 million at the end of September from just 1.6 million a year earlier. Rumble is another firm currently in the process of going public through a deal with a SPAC named CFVI. TMTG has already announced it has partnered with Rumble, which will provide the video and streaming services used on TRUTH Social. They are also in talks about Rumble providing infrastructure and video delivery services for TMTG+.

How many users will TRUTH Social have?

TRUTH Social has not yet been launched but people are registering their interest for when it does. Trump’s huge social media following when he was allowed on mainstream platforms was huge and is the primary target upon launch. Trump had over 146 million followers, subscribers and listeners across three of the biggest platforms, with 89 million on Twitter, 33 million on Facebook and 24.5 million on Instagram. That number should be treated with caution, considering he was president at the time.

Although it wants to appeal to both the left and right to facilitate a wider discussion on today’s hot political topics, TMTG is ultimately being created to provide an online space and outlet for conservative views – even if the company doesn’t market it that way. TMTG’s own market research shows less than one-third of Americans would use a social media platform backed by Trump.

One survey in TMTG’s presentation showed 54% of Americans would not use a platform backed by Trump, with only 30% stating they would and 16% stating they would consider it. TMTG believes it can appeal to liberals, independents and conservatives, but only 54% of Republicans said they would use Trump’s social media platform alongside just 12% of Democrats.

Trump will remain a key figurehead for the business, undoubtedly giving the company a head start by tapping into his large number of followers while simultaneously alienating an even larger group of people.

TRUTH Social will need to capture a significant number before it goes live if it is to gain the momentum needed to gain mass appeal to avoid a disappointing launch.

Understandably, there will be great focus on user numbers once the company launches its social media platform and, down the line, its video streaming and news sites. This will be a key gauge from the get go, but the real battle in this industry is for time.

We all have 24 hours in a day and social media and content-driven companies are trying to capture as much of it as possible, whether its Netflix and traditional broadcast television to the bookshelf in your living and time spent on gaming consoles. The more time people spend on a platform or site, the greater appeal there is among advertisers to raise their marketing budgets for that channel. TMTG’s goal is to engage with people who feel alienated by other platforms and, if enough of them shift over, then marketing dollars could follow. The real job is convincing advertisers their money is better spent on TRUTH Social than it is on Facebook or Twitter, and that could be a hard sell for those looking to reach the widest audience, but possibly appealing for those looking to reach a certain type of customer.

Who does TMTG compete with?

TMTG has not only cast a large net when it comes to rivals, but it is targeting the biggest fish. Twitter and Facebook are the main rivals it is competing with, but it has also listed a string of players in the video streaming and news sectors, including Netflix, Disney+ and CNN.

Interestingly, Trump revealed last year that TMTG was looking at creating ‘“cancel-proof” alternatives in other key areas ranging from web services to payment processing’ over the longer-term. TMTG has also revealed this will be based around the ‘TMTG Tech Stack’ and will put it on course to come head-to-head with even bigger players in the cloud-computing and online payments space such as Amazon Web Services, Google Cloud, Microsoft Azure and Stripe.

Who will manage TMTG?

TMTG will continue to be chaired by Trump after the combination with DWAC is completed. The company announced in December that congressman Devin Nunes is joining the company as its new chief executive in January 2022. He is currently a sitting House Representative representing California’s 22^nd congressional district, but he will be stepping down to take up the CEO role, and was formerly the chair of the House Intelligence Committee.