Subject: Re: Truth Social going public?
I don't think this IPO will solve his immediate problems.

First, he needs cash TODAY (well, technically, Monday 3/26) and in any circumstance, shares in this IPO are locked up for six months before insiders can sell.

Second, even after six months when he would be able to cash out a huge portion of the shares to net $550 million, someone actually has to BUY those shares at the insanely inflated price that led to the initial expected $3.x billion dollar evaluation. That's an iffy proposition. The company itself is not making any money. As of August 2022, Truth Social owed about $1.6 million in unpaid monthly compute charges to the data center running its servers. As of November 2023, filings as of mid-2023 showed the firm accumulating a loss of $31 million since launch.

https://www.reuters.com/techno...

Keep in mind, the launch of Truth Social was not much of a capital investment. Messaging software is not terribly advanced and the service is running on leased compute so it's not like the firm had to spend $50 million up front for hardware to go live then have to crawl out of the red back to black before making money. The compute bills rise in lock step with usage and if you are losing money from inception, the business model is NOT making money.

Anyone buying in on IPO day at the insane valuation will have six months to contemplate their potential mistake and try to cash out ahead of the other suckers. The minute anyone does that, the price will go down, leaving Trump with less to cash out when his six month lockout ends.

If the SPAC nets a giant payday from the IPO of a company losing money, that would imply they somehow already found every sucker willing to buy the next Trump Steaks. If everyone dumb enough to buy up the shares is already all-in, any attempt to flood the market with more available shares as Trump cashes out will drive the price down and shrink his take as he attempts to cash out. Of course, that doesn't prevent a Saudi prince or a Russian despot from buying up shares to help their buddy out. Of course, in six months, Trump's larger trajectory may be headed in a vastly different direction and the prince and the despot may realize there's no payoff for bailing him out and may decline to help.

Although the leaders of the SPAC driving this deal voted to approve the IPO, a former employee of the SPAC sued the SPAC in February 2024 to block any transaction until his share of the deal was increased. It isn't clear where that suit stands or whether it was resolved as part of the recent vote of remaining board members of the SPAC. It seems likely though that nothing involving Trump will go smoothly on schedule from a legal standpoint.

Perhaps the biggest unknown in this aspect of the Trump financial saga is whether the terms he'll have to reach with the State of New York regarding these judgments will include visibility into Trump's PERSONAL accounts and other business deals launched outside the context of The Trump Organization. One would hope there would be equal monitoring in place on ANYTHING Trump does and there would be SEC insight into who buys giant blocks of shares in this new company. Of course, nefarious actors could easily create hundreds of shell companies then use those shells to buy up shares of Truth Social and evade discovery of the actual underlying party.


WTH