Donald Trump recently disclosed that he is launching a new social media app called “TRUTH Social” in November. He intends that the app be owned by Trump Media and Technology Group (TMTG). It will be funded by a special purpose acquisition corporation (“SPAC”) called Digital World Acquisition (DWA).

TRUTH Social is sure to be controversial, but before getting to the politics of free speech let’s consider its viability as a business matter. DWA is following the typically complex SPAC scheme for “blank check” companies appropriately named because they don’t tell the investors what the company will do with their investment. It was funded by DWA investors in September 2021 for $293 million to effectively secure the plan. But there is no PIPE financing disclosed so that redemptions could deplete the $293 million before the ultimate funding plan is completed.

After a series of transactions, TMTG will survive as a wholly-owned subsidiary of DWA with TMTG equity holders (including Trump) owning shares of DWA common stock. The plan is for DWA to launch an initial public offering of DWA common stock (IPO listed on Nasdaq and file a Registration Statement with the SEC. According to DWA’s October 20, 2021 press release it put in trust its $293 million “to fuel TMTG’s scale-up”.

Its predicted IPO is set for 25 million shares at $10 per share or $250 million. DWA’s valuations are optimistic indeed. But on October 21, 2021, it was reported that DWA stock had risen more than 400% to $56 per share notwithstanding all of the investment risks disclosed by DWA. This early activity suggests that investors are throwing caution to the wind. Experts suggest that the early surge in demand is from loyal Trump fans who have proven to buy whatever Trump is selling.

The trouble is, like all ‘blank check’ offerings, we don’t know what TMTG or DWA will be doing to earn dividends or capital growth to its investors. DWA issued a press release on October 20, 2021, announcing that TMTG’s mission is to “create a rival to the liberal media consortium and fight back against the “Big Tech” companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America”. In other words, Trump intends to challenge Facebook, Twitter, and others who banned Trump from their platforms because of his role in inciting the January 6, 2021 insurrection.

Neither DWA’s press release nor the 8-k tells us much basic information about the players. This is not uncommon for ‘blank check’ companies. Donald Trump will be chairman of TMTG but no CEO is disclosed. The head of the subscription streaming service will be Scott St. John, a veteran TV producer.

DWA’s leader is Patrick Orlando. The public disclosures say that Orlando has been “involved” in multiple SPACs but it is reported that he has never completed a planned acquisition. In other words, the target companies were never ultimately funded.

Notwithstanding the investment risks, the potential success of TRUTH Social will be enhanced by the Trump brand. That is apparent from the exuberance of DWA’s investors displayed just one day after the public announcement.

Former President Trump thrived on his postings on Facebook and Twitter and bridles at his lack of access to social media. He had an abundance of social media followers before his expulsion. He had no control over those platforms. But with his new TRUTH Social, he will have control over its content.

If TRUTH Social proselytizes the Trump doctrine while providing a stable and easy to use platform, there is every reason to believe TRUTH Social will be a successful app. It remains to be seen how profitable an investment in DWA will be.