Investors have soured somewhat on Donald Trump’s new media company, and if Massachusetts Sen. Elizabeth Warren gets her way, a new federal probe into Trump Media & Technology Group could put further pressure on her share price. shares.
The company, which plans to take on social media giants Facebook FB,
and Twitter TWTR,
with a new app called Truth Social, went public through a SPAC merger with Digital World Acquisition Corp. DWAC,
last month, after which investors drove the stock from $10 a share to over $90 in two days.
Since then, DWAC shares have steadily fallen to around $55, still significantly higher than its initial price, especially for a company that has provided little information about its finances or business plan.
But the company could be in further trouble after Warren, a Democrat and former Harvard law professor, asked the Securities and Exchange Commission to investigate whether she “committed securities violations by holding private discussions and undisclosed about the merger…while omitting that”. information in U.S. Securities and Exchange filings and other public statements,” according to a letter she sent Thursday to SEC Chairman Gary Gensler.
“The reports on DWAC and Trump Media and Technology Group appear to be a classic example of a SPAC misleading shareholders and the public about materially material information,” Warren wrote.
She added that SPACs are expected to disclose any communications with potential target companies to protect both early investors in the SPAC deal and retail investors who buy shares in public markets.
The SEC did not immediately respond to a request for comment.
Warren pointed out an article from the October New York Times who cited unnamed sources as saying DWAC Chairman and CEO Patrick Orlando began discussing a deal with Trump in March before DWAC went public. The company filed with the SEC between May and September 2021 that it had not engaged in any “substantive discussions” with a merger target.
“This omission had the result of enriching large investors while trapping retail investors in a stock market bubble,” Warren wrote.
The Massachusetts Democrat also took issue with the fact that Trump Media and Technology Group gave few details about its finances or business plan.
“The absence of a core business model for Trump Media and Technology Group also raises questions about the extent to which DWAC could profit from the SPAC model and its inherent disclosure failures,” Warren wrote.
“A company overview from Trump Media and Technology Group does not list any executives, employees or operations, instead relying on former President Trump’s branding and ambitious statements about the company’s ability to compete with existing social media giants, traditional news media. , and streaming services including Netflix NFLX,
and Disney Plus DIS,
”
