Why Elon Musk is a problem for Trump’s Truth Social, Truth Social is lagging behind other social media platforms in speed and audience engagement. Additionally, two high-ranking executives have departed, and the merger that could save Trump’s project with $1.3 billion doesn’t seem to be going anywhere.
Why Elon Musk is a problem for Trump’s Truth Social
And now Truth Social’s purpose is under attack. Elon Musk’s plan for a hostile takeover of Twitter poses the latest challenge to Trump Media & Technology Group’s flagship app, Truth Social. Trump has advertisedTruth Social as a carefree conservative option to Twitter.
Musk said on Thursday that he had received $46.5 billion in financing for his takeover bid, and suggested that he would relax Twitter’s moderation policies – which he has complained about in the past and which famously led to Trump being banned from the site for inciting violence over the outcome of the 2020 presidential election.
Karen Freberg, a strategic communications professor at the University of Louisville, believes Truth Social may have missed its chance.
“Truth Social could have succeeded if given the chance,” she said. “But what’s happening with Twitter is that it’s gotten a lot of media attention and spotlight, and now Elon Musk is using his influence.” Trump Media declined to comment on Musk’s Twitter bid. Liz Harrington, a spokesperson for Trump, referred to a recent interview with Americano Media in which Trump said he “probably wouldn’t join Twitter again if given the opportunity.”
Even without a rival that might entice its existing user base, the Trump Media and Truth Social platforms were under significant strain.
Trump Media’s merger with Digital World Acquisition, a cash-rich blank-check company that raised around $300 million in an initial public offering, is fast running out of time. If the two firms do not finish their merger by Sept. 8 or extend the deadline, Trump Media might miss out on that money. Investors in a $1 billion private placement to back the deal could also withdraw if it isn’t done by September 20th.
It’s been five months since the companies announced their intention to merge, and investors are already impatient. While dealing with an SEC investigation is nothing new for Digital World, it has had a very short time to complete the merger while also addressing concerns. Just weeks after announcing the deal plans in October, Digital World disclosed the investigation. The regulatory body is looking into suspicious trading activity in company shares prior to the announcement and seeking information regarding possible communications between representatives of the two firms before Digital World, a special purpose acquisition entity (SPAE), or SPAC went public in September.
The SEC has requested numerous emails and text messages from people connected to the merger talks, according to two people briefed on the matter but not permitted to speak publicly. The inquiry has fueled growing doubts about the deal’s chances. On Wednesday, Kerrisdale Capital, a prominent short-selling hedge fund — one that specializes in betting against a stock’s rise — released a 27-page analysis predicting that the SEC would never approve it.
Investor excitement has waned as well: The stock of Digital World tumbled 17% this week, despite an 8% rise Friday. Despite the fact that its share price has dropped significantly, the company’s annual report, which was filed last week, does not mention the SEC inquiry and provides little information on the merger’s progress.
Some investors are furious because of the lack of information regarding when the transaction might be completed, according to three people informed about the situation but who did not want to speak publicly since the deal was yet pending. nnSome investors have contacted representatives for both firms and bankers involved in the transaction, but none was given, according to people familiar with the matter.
The announcement for the merger was made six months ago, but it has since progressed slowly. According to Dealogic, a deal tracking service, this is about how long SPACs such as Digital World usually take to go from announcing a merger until it is completed.
Digital World has yet to file an S-4, a critical registration document in any merger or acquisition, which is a milestone. An S-4 is usually filed within two months of the deal’s announcement, according to Mike Stegemoller, a finance professor at Baylor University who tracks SPACs, a sort of shell company that goes public with the goal of merging with another business. “As soon as feasible,’” Digital World’ s annual report promised, the S-4 would be submitted.
Regulators are looking at the transaction because a SPAC is not allowed to take a deal public. According to The New York Times, Benessere Capital Acquisition, another Orlando-led SPAC, was the first intended merger partner for Trump Media, but those talks fell through when several board members refused to work with Trump. In August 2018, Benessere announced that discussions with an unnamed “media and technology firm” had come to an end; shortly before Digital World went public.
Trump Media would face a more uncertain future. Interest in Truth Social has been on the decline since its inception. The app was downloaded an estimated 41,000 times in the last full week of March, down 95 percent from the same period the previous month, according to Sensor Tower, an app insights firm.
In comparison to Twitter’s 200 million active users, Sensor Tower estimated that Truth Social—an app only available on Apple devices—has 1.3 million installs. Furthermore, Trump has published just one post on the app, though he recently hit the 1 million follower mark; this is a sliver in comparison to the 89 million followers he once had on Twitter. His single post was back in February and simply read “Get Ready!”
The platform began with problems and a lengthy waiting list. According to three sources familiar with the matter, there was a rush to get it up and running as soon as possible amid concerns about the app’s performance of some of the back-end technology that would help underpin it. Last month, two top tech executives working on Truth Social, Josh Adams and Billy Boozer, departed the firm, according to Reuters. They were said to be unhappy with aspects of the system behind the platform, according To five people briefed on the situation. Neither replied when asked for comment.
The departures of these executives add to the mystery of the firm’s inner workings. Trump Media provided the complete names for a small number of employees in a November presentation to investors. Josh Adams, the company’s chief technology officer, and Billy Boozer, its chief product officer, were referred to as “Josh A” and “Billy B,” respectively. The company’s chief financial officer, Phillip Juhan, was not named at all.
Juhan and Devin Nunes, hired by Trump in December to be the CEO of Trump Media, are recorded as directors in a Georgia filing from last month. Incorporation for Trump Media is also in Delaware but Mar-a-Lago club located in Florida is labeled as the corporate headquarters.
Nunes has Escape Goat status with numerous interview requests that have been ignored.On Fox Business Network’s “Mornings With Maria” this month, he finally talked to host Maria Bartiromo about Twitter being a “ghost town.”
Twitter needs Musk says Nunes.(Devin that is)
