A media company founded and majority owned by former President Donald Trump went public Tuesday with shareholders approving a merger between Digital World Acquisition Corporation DWAC and Trump Media & Technology Group (TMTG) after several setbacks.
Benzinga spoke to two market experts, who both have specialized in coverage of the SPAC sector in recent years.
SPAC Delays And Setbacks: First announced in October 2021, the SPAC agreement between the two companies faces multiple setbacks included shareholder vote delays, investigations and most recently co-founders of TMTG taking legal action against Trump over dilution.
With multiple setbacks, many investors and analysts wrote off the deal ever getting approved.
"I thought it would be difficult but never bet against Trump, so yes I thought it would get approved," Tuttle Capital Management CEO Matthew Tuttle told Benzinga.
Julian Klymochko, CEO of Accelerate, was more convinced the merger wouldn't be approved.
"The Digital World Acquisition/Trump Media deal closing after nearly three years is practically unprecedented. Deals die on the vine and this transaction took longer than any to close," Klymochko told Benzinga.
Klymochko said he expected the deal to fail after multiple setbacks including SEC fines, management turnover, lawsuits and a decline in the outlook of its underlying business.
"Kudos for the respective management teams for getting it done and shareholders for sticking with it. I thought the deal would fail and I'm eating crow."
Related Link: Trump SPAC Merger Approved, Set For Imminent Public Debut: The Profits Some Investors Missed
Trump's Past Public Company: While Tuesday marked the debut of his media company going public, it's not the first time Trump has taken a company public.
Trump previously took Trump Hotels & Casino Resorts public in 1995 with an IPO priced at $14 and $140 million raised.
The casino company had filed for bankruptcy years before it went public and, after adding debt from acquisitions and years of setbacks, declared bankruptcy again in 2004. The first public company associated with Trump also used his initials DJT as its symbol, but traded on the NYSE.
Subsequently, the company underwent restructuring and rebranded as Trump Entertainment, transitioning to trade on the Nasdaq with the new symbol TRMP. However, it faced delisting and ultimately met a fate similar to its predecessor. The casinos that were once part of Trump’s business empire have since been acquired by different owners.
When asked about the use of DJT as the ticker and the potential negative sentiment from the past bankrupt company, Tuttle said this is the right move.
"It's Trump, he is going to use his name, which he can't, so his initials are the next best thing. He wants his name on everything, so for him I think it's smart," Tuttle said.
Tuttle said some investors may get the DJT ticker confused with the Dow Jones Transports index though.
While the last company owned by Trump may have been a way to invest in the casino and hotel segment and also bet on Trump, the new public company could see a higher correlation to investors betting on Trump and less so on his social media company.
"This is going to be a way to bet on or against Trump, and the Trump brand."
Klymochko also said the new Trump company could be a "meme stock."
"DJT is a great symbol for the shares as it is a meme stock and the ticker plays into that," he said.
Klymochko sees more investors trading TMTG betting on Trump instead of the social media company.
"The stock provides exposure to Donald Trump. I don't think anyone holding the shares is keen on investing in Truth Social. Those two concepts are independent."
What's Next: Trump owns 80 million shares of TMTG and has additional share compensation based on price targets now that the company is public.
While Trump is subject to a six-month lockup on shares, some believe that the board of directors could make changes to the unlocking plan. Facing multiple trials and judicial rulings against him amounting to hundreds of millions of dollars, the former president might consider selling his shares in the company to free up capital.
Tuttle sees shares of TMTG having high volatility during its market debut.
"I think this is going to trade like a meme stock, you have a rabid following and anyone who's a short seller is going to short this thing like crazy. I think it is going to be a great trading vehicle," Tuttle said.
Tuttle, who has created ETFs themed on Jim Cramer and Cathie Wood in the past, said "maybe" when asked if he'll ever create a fund based on the new public company.
Klymochko shared concerns of the high volatility of the newly public company and the potential catalyst of Trump selling his shares.
"A big question is if/when Trump will sell shares, given he controls the majority of the float. Trump selling shares could have substantial implications on the share price and supply. He's subject to a lock-up currently, but I wouldn't be surprised if it gets waived," Klymochko said.
DJT Price Action: Shares of Trump Media & Technology Group are up 37% to $68.28 on Tuesday, hitting new 52-week highs of $79.34 earlier in the day. Shares of the company are up over 400% in the last year.
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