There’s more bad news for the company set to merge with Donald Trump’s Truth Social to go public: Investors are starting to walk away.
Digital World Acquisition Corp. — the special purpose acquisition company (SPAC) that Truth Social needs to go public — disclosed in a Securities and Exchange Commission filing Friday that investors have backed out of $139 million in $1 billion in commitments previously announced by the company.
There will probably be more. Investors, who agreed to put up the money nearly a year ago, can now drop their commitments because Digital World missed its first Sept. 20 deadline to merge with Truth Social.
DWAC is extending the timeframe for the deal by three months after shareholders refused to approve the bid for a 1[ads1]2-month extension. But investors can still pull back.
It’s just the latest problem for Digital World and Truth Social.
A key supplier complained last month that Truth Social bills were going unpaid. A major web hosting operator said Truth Social owed about $1.6 million in contractually obligated payments, a claim that suggests the operation’s finances are in “significant disarray,” Fox Business News reported.
In another setback, Truth Social’s application for a trademark was rejected last month because the name was too similar to other operations.
Truth Social is hardly what some investors had hoped for. The social media platform is largely a forum for Trump, who repeatedly posts self-deprecating messages and reposts articles from right-wing media praising him every day.
Responding comments mostly involve QAnon conspiracies, over-the-top pro-Trump and anti-Joe Biden memes, and horrifying comments like, “Ode to the greatest president ever.”
Comments lack the back and forth of social media platforms like Twitter that make them more of a dialogue. Most negative comments on Truth Social are buried or disappeared from the site, which the organizers had promised would be censorship-free.
Trump launched Truth Social after he was kicked off Twitter in the wake of the January 6, 2021 riot at the US Capitol. Trump has used the platform the same way he did Twitter — to attack enemies, complain he’s being victimized and falsely insist he won the 2020 presidential election.
Last month, Digital World warned in an SEC filing that a drop in Trump’s popularity could hurt its business. The filing noted that Truth Social’s success depends on the “reputation and popularity” of the investigation-plagued Trump, who heads the Trump Media and Technology Group, which owns and operates the social media platform.
“To succeed, TMTG will need millions of these people to sign up and regularly use TMTG’s platform,” the filing warned. “If President Trump becomes less popular or there are further controversies that damage his credibility or people’s desire to use a platform associated with him,” the planned merger with Digital World “could be adversely affected,” it warned.