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Donald Trump’s meme investment: No product? No revenue? No problem

Written by on December 10, 2021

Donald Trump’s meme investment: No product? No revenue? No problem

Donald Trump’s meme investment: No product? No revenue? No problem

No product? No revenue? No problem.

It shouldn’t be a surprise that TMGT looks like a shambolic venture. There are echoes of Trump’s rag-tag but successful 2016 presidential campaign, as well as the Trump Organization, including the third-rate minions and questionable, if not illegal, practices.

The Trump MO, 100 percent.

When Trump shared his vision for TMTG — at this point, there’s no evidence it’s anything but a concept — he also said it would go public through a merger with Digital World Acquisition Corp. Digital World is a special purpose acquisition company, an investment vehicle that raises money through an initial public offering, with the goal of buying a private company that wants to become publicly traded.

Known as SPACs, these shell companies have been around a long time, and they developed a checkered reputation because they typically worked on the fringes of Wall Street. They’ve gone mainstream in the past few years, however, and Trump’s celebrity and cult-like following will no doubt help the deal stand out in a crowded field.

Yet as savvy commentators such as Dan Primack of Axios and Matt Levine of Bloomberg Opinion have written, there are just so many head-scratching aspects to this deal.

For starters, the October merger agreement was put together hastily, at least by SPAC standards, and regulators are looking into whether Digital World’s chief executive broke rules by negotiating with the former president prior to the SPAC’s own sale of stock to the public just a month earlier. Then there’s the almost laughable investor presentation that TMTG and Digital World released in November; it’s amateurish in parts and light on crucial financial details throughout.

Wait, there’s more.

Trump and Digital World haven’t disclosed the investors who they said agreed to buy $1 billion in stock through a privately arranged sale announced last weekend. That’s odd because: 1) such transactions are often touted to show that serious money supports the SPAC deal; and 2) it suggests that the investors may be reluctant to be linked publicly with Trump, who continues to peddle the Big Lie that the 2020 election was stolen from him. It’s worth a mention that their deal with Trump gives these investors the right to flip their shares immediately at what is likely to be a healthy profit.

And just this week: Trump announced that the CEO of his media-empire-in-the-making would be . . . Devin Nunes. Yes, that Devin Nunes, the US representative from California who has no tech or media industry experience and whose primary qualification for the job apparently is his unflinching loyalty to Trump and the Big Lie.

“It’s not your average SPAC deal on many different dimensions,” said Usha Rodrigues, a University of Georgia law professor who has studied SPACs.

True Trump believers — as well as investors who don’t care what a company does as long as its stock is volatile enough to make it ripe for trading profits — don’t care about any of this.

As a proxy for TMTG, they pushed the value of Digital World’s stock briefly to $175 two days after the deal was revealed from just below $10 the day before the news. The shares have since retreated, closing on Thursday at $56.65, still a more than fivefold gain for anyone who bought Digital World when it was just an obscure SPAC.

Why, you may be asking, would Trump want to control a public company in the first place, what with all that scrutiny and pressure to abide by generally accepted accounting principles. The family business has always been private, and he loathes disclosing financials, tax returns, and hush-money payments to porn stars. His last run at a public company — Trump Hotels and Casino Resorts in the 1990s — ended in bankruptcy.

But, as the New York Times reported in 2016, “even as his [casino] companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen.”

Nearly 30 years after he went bust in Atlantic City, Trump Media & Technology Group exhibits all the classic traits of a Trump business: a surfeit of self-promotion, a dearth of details, and the sneaking suspicion that he’ll make money even if the venture is a flop.

Larry Edelman can be reached at Follow him on Twitter @GlobeNewsEd.

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The post Donald Trump’s meme investment: No product? No revenue? No problem appeared first on Correct Success.

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