On December 6 the Digital World Acquisition Corporation, which has stock symbol DWAC, the SPAC that is merging with President Trump’s newly formed media company, included an investor presentation in an SEC filing (scroll the bottom of the filing). One of the most important charts in it (slide 5) shows assumptions for how many shares could be outstanding if the merger is completed and a $1 billion PIPE or Private Investment in Public Equity is closed.
The reason this is so important is because currently there are 37.2 million shares outstanding but they could balloon to 193 to almost 225 million, depending on which stock price and earnout scenario plays out.
Market cap would skyrocket
DWAC’s closing price on Thursday was $51.91. Using the 37.2 million shares this would value Trump’s TMTG or Trump Media & Technology Group at $1.9 billion.
However, using the 193 and 225 million share counts shown in the slide, DWAC’s market cap would skyrocket to $10 to $11.7 billion, respectively.
Companies that have market caps between $10 and $11.7 billion in ascending order include Levi Strauss, Suncorp, Invesco, Singapore Airlines, Lear, Alcoa, Hertz, Grubhub, DraftKings, Avis and American Airlines per CompaniesMarketCap.com. And these companies, which generate hundreds of millions or billions of dollars in revenue, have very large organizations and many have been around for decades, which demonstrates what it typically takes to get to a $10 billion valuation.
Huge market cap with no to little revenue
The investor presentation also includes a slide, the last one, with estimates for TRUTH Social and TMTG+’s number of users or subscribers, how many could be monetized for TRUTH Social and ARPU or Average Revenue Per User for both offerings. It then shows how much total revenue these would generate. Note that TMTG+ is expected to generate the lion share of revenue. The two key TMTG+ assumptions are:
- Ramping from 4 million users in 2023 to 40 million in 2026
- Charging $5.56 on average per month in 2023 increasing to $9 per month in 2026
Total revenue would start at $114 million in 2023, essentially the first year of generating revenue, and grow to $3.7 billion in 2026, its fourth full year.
Note that while these projections are compared to current, well-known companies, in other parts of the presentation, they are subject to major revisions and in my experience will more likely move down than up. Also note that the beta version for Truth Social was supposed to be available in November but as of December 30 the website was asking people to join a waiting list.
The shares have settled around $50
After the initial rush of excitement about DWAC merging with Trump’s social media company where the shares hit an intra-day high of $175 on October 22, they have seemed to have settled down in the low $50’s for almost three weeks. They have even increased from $45 on December 3, the day before the PIPE deal was announced with a conversion price of $33.60.
If the shares can hang around $50 DWAC and therefore Trump’s media company would be valued between $10 to almost $12 billion with no revenue.