✓ Digital World shares fell 4% in pre-market trading Friday to about $19.20—steepening a decline that has seen the stock lose more than 80% of its value since an all-time high of more than $100 in March.
Digital World isn't alone among SPACs struggling to close a deal after the economy descended into a bear market this year. Earlier this month, nearly $11 billion worth of SPAC deals were called off on the same day. Completed SPAC deals this year through September totaled about $39 billion—down nearly 90% from $341 billion over the same period last year, according to law firm White & Case.
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More Trouble For Trump’s Truth Social: Three Execs Abruptly Depart SPAC As Lingering Investigations And Market Chaos Imperil Deal
Updated Dec 16, 2022, 11:42am EST
Topline
Digital World Acquisition Corp., the special-purpose acquisition company picked to take former President Donald Trump's social media company public, unveiled a series of high-level departures on Friday since the end of last month—deepening potential worries for the firm as it struggles to finalize a deal amid regulatory investigations and broader market chaos.
Key Facts
In a regulatory filing released Friday morning, Digital World announced board member Rodrigo Veloso and chief financial officer Lee Jacobson sent letters of resignation to the company on December 9, while board member Luiz Philippe Braganza informed the firm of his departure on November 28.
The company did not immediately respond to Forbes' request for comment, but the filing states the resignations did not result from any disagreement with the firm on matters related to operations, policies or practices.
The slew of resignations come after another board member, Justin Shaner, abruptly resigned in early November—just days before the company held a crucial meeting to see whether shareholders would approve a measure to extend an early December deadline to complete the acquisition of Truth Social.
Shareholders ultimately approved the measure in a vote, giving the SPAC an opportunity to extend the deadline until September—which would be nearly two years after the company originally announced its deal to acquire Truth Social.
Digital World shares fell 4% in pre-market trading Friday to about $19.20—steepening a decline that has seen the stock lose more than 80% of its value since an all-time high of more than $100 in March.
Key Background
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Last October, Digital World announced plans to acquire Truth Social, the social app Trump launched last year to court conservative supporters, but the firm has struggled to make progress amid a slew of regulatory investigations into the matter. Both federal prosecutors and regulators—including the Securities and Exchange Commission—are probing the deal for alleged misrepresentations and certain transactions between Truth Social's Trump-owned parent and Digital World. When asked at a conference last month about the uncertain timeline for the proposed merger, Digital World CEO Patrick Orlando simply said the firm "[doesn't] have an update" on the regulatory review. On Thursday, Trump revealed Truth Social's latest "major announcement"—a line of $99 non-fungible tokens, which themselves have struggled to renew traction amid a steep market downturn.
Tangent
Digital World isn't alone among SPACs struggling to close a deal after the economy descended into a bear market this year. Earlier this month, nearly $11 billion worth of SPAC deals were called off on the same day. Completed SPAC deals this year through September totaled about $39 billion—down nearly 90% from $341 billion over the same period last year, according to law firm White & Case."
Further Reading
Trump’s ‘Major Announcement’ Was To Hawk His $99 NFTs (Forbes)
Truth Social Has a Content Moderation Problem
Trump’s site faces criticism for hosting violent content—and for filtering innocuous posts.
In the wake of the FBI’s search of former President Donald Trump’s residence, some users of the social media platform he helped start urged people to respond with violence.
Before 42-year-old Ricky Shiffer made his fatal attempt to breach an FBI office in Cincinnati,
an account in his name posted a “call to arms” on the site, Truth
Social, and told people to “get whatever you need to be ready for
combat.” A letter that the House Committee on Oversight and Reform sent
to Truth Social on Aug. 19 expressed concern over other posts, including
one that said “F--- the Feds! The Second Amendment is not about
shooting deer! Lock and load!” and another calling on people to “Arm
yourselves! We are about to enter into Civil War!”
The letter, addressed to former Republican Representative Devin Nunes, the chief executive officer of Trump Media & Technology Group, the parent of Truth Social, demanded information about what criteria the platform uses to decide which content should be removed and the resources it dedicated to content moderation. It also asked how many threats against federal law enforcement it had identified since the Mar-a-Lago search and how many of those posts were removed or reported to authorities. The committee made similar inquiries to Meta Platforms, Twitter, TikTok, and other social media companies.
Founded by Trump after his ouster from Twitter, Facebook, and YouTube in the wake of the Jan. 6, 2021, riot at the US Capitol, Truth Social has promised to be a place where its users can say whatever they please. When it launched in Apple’s App Store in February, the site joined an increasingly crowded field of “alternative tech” platforms catering to right-wing users, including Gettr, Parler, and Gab.
The app has been downloaded about 3.2 million times, trailing far behind Parler and Gettr, according to estimates from Sensor Tower, a firm that tracks app data. (Sensor Tower couldn’t provide estimates for Gab, which isn’t available in the App Store or Google Play Store.) But downloads have increased precipitously since the search of Trump’s home, illustrating how much Truth Social and its peers thrive on political conflict.
There’s been a noticeable intensification in violent rhetoric on all these services since the FBI’s Mar-a-Lago search, says Josephine Lukito, an assistant professor at the University of Texas at Austin. “The FBI raid has increased this need to take action” in users’ minds, she says. “The discourse has ramped up—the level of frustration has ramped up.”
That Truth Social would take a more tolerant view toward speech that mainstream social networks consider beyond the pale is to be expected—that’s essentially why it exists. More surprising is how aggressive it’s become at filtering other kinds of posts. In an Aug. 2 report, Cheyenne Hunt-Majer, a fellow for the consumer advocacy group Public Citizen, wrote that she shared a post on Truth Social containing the phrase “abortion is healthcare,” only to find it was rendered essentially invisible on the site, a process sometimes referred to as shadow-banning. Hunt-Majer wrote that the post reappeared after a TikTok video she made about the incident went viral. But another one of her Truth Social posts—this one reading, “If you don’t own a uterus and know everything about women’s health, you have NO right to regulate abortion or birth control”—never showed up on her profile or in her feed.
Several Truth Social users have also reported that their accounts were permanently suspended after they posted about the hearings of a House committee investigating the assault on the Capitol. In a statement given to the Washington Times, a spokesperson for the platform said the allegations were “transparently stupid.” . . . READ MORE
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