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Opinion
Matt Levine

The Trump SPAC Did a PIPE

Also romantic insider trading and NFTs.

In September, a company called Digital World Acquisition Corp. went public, raising $287.5 million by selling stock to investors at $10 per share. DWAC is a special purpose acquisition company, or SPAC, a blind pool to find another company to take public. The idea is that the SPAC puts the money it raises into a bank account, finds a private company that wants to go public, and merges with that target company. The target company gets the money in the SPAC’s bank account — $287.5 million or so, in DWAC’s case — and the public shareholders of the SPAC get back shares in the target company, which becomes a public company by merging with the SPAC. If the SPAC doesn’t find a deal within two years, or if the shareholders don't like the deal it finds, they get their $10 back.

In October, DWAC announced its merger, and it was a doozy. The private company that DWAC will take public is Trump Media & Technology Group, which is … a … media … and … technology … group? … affiliated with Donald Trump. Nobody had heard of TMTG before it announced its SPAC merger, and nobody has heard all that much about it since. “Trump Media & Technology Group (‘TMTG’) will soon be launching a social network, named ‘TRUTH Social,’” said the merger announcement, promising a beta launch in November. It missed that deadline. A test version of the site seemed to be just a clone of open-source social network Mastodon. TMTG’s website has a “company overview” slide deck that contains no business information and does not mention anyone involved in building its supposed technology. “This appears to be a shell company buying a shell company,” wrote Dan Primack.