By the end of this week, Trump Media and Technology Group - Donald Trump’s new plaything - should have filed what’s known as a 8-K statement with the US Securities and Exchange Commission which should contain the full 2023 financial and other details of the company.
An 8-K is known as a “current report” and it is the report that companies must file with the SEC to announce major events that shareholders should know about. Companies generally have four business days to file a Form 8-K for an event that triggers the filing requirement. This week’s merger and listing clearly does that.
According to a definition on the Cornell Law School website, an event requiring an 8-K filing includes "entry into or termination of a material definitive agreement, bankruptcy, completion of acquisition or disposition of assets, results of operations and financial condition, unregistered sales of equity securities, changes in registrant’s certifying accountant, changes in control of registrant, changes in or election of directors and officers, amendments to articles of incorporation, or bylaws, submission of matters to a vote of security holders, Regulation FD disclosure and financial statements and exhibits.”
And Regulation FD adds to that because, as the website explains, the SEC brought in "Regulation FD in response to reports that public companies disclosed material non-public information, such as advance information on earnings results, to securities analysts or selected institutional investors.”
"By requiring that companies disclose such material information, Regulation FD aims to ensure that all investors have equal access to the company’s material disclosures at the same time.
"In the case of intentional selective disclosures, the company must release the material information simultaneously. In the case of unintentional selective disclosure, the company must publicly disclose the material information shortly afterwards,” the website explained.
Going on Donald Trump’s long history of public utterances, boasting and other over the top statements, Trump Media potentially faces a busy future making filings.
This level of disclosure and accountability wasn’t around when he was last involved in a public company called Trump Hotels and Casino Resorts from 1995 to 2004 when it collapsed and was reborn only to collapse at least two more times before disappearing in 2016. Investors lost an estimated $US600 million in that company.
Trump Media of course is the newly named Digital World Acquisition Corp with Truth Social, Trump's pale imitation of X (Twitter)
The company debuted Tuesday with a price near $US66 and a market value of about $US9.4 billion. Trump has around 58% of that figure for his holding of near 80 million shares.
Some US media wonder if the 8-K statement will reveal another lot of data -Truth Social’s user numbers, and how much time they stayed on the site and if there is any advertising revenue and how much?.
"Research firm Similarweb estimates that Truth Social had roughly 5 million active mobile and web users in February. That’s far below TikTok’s more than 2 billion and Facebook’s 3 billion — but still higher than other “alt-tech” rivals like Parler, which has been offline for nearly a year but is planning a comeback, or Gettr, which had less than 2 million visitors in February,” CNN reported this week.
Many of the investors still in the company were small-time investors either trying to support Trump or aiming to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock more than double this year in anticipation of the merger going through. Now it has and the shares are on a tear.
Of course, being a Trump company, the main asset - his Truth Social media platform is the centrepiece and the lead weight in a company with no other assets.
Truth Social has yet to turn a profit. It lost $US49 million in the first nine months of last year, when it brought in just $3.4 million in revenue. In a recent regulatory filing, CNN pointed out that the company cited the high rate of failure for new social media platforms, as well as the company’s expectation that it will lose money on its operations “for the foreseeable future” as risks for investors.
Back in 2021, Forbes magazine reminded readers of Trump's previous corporate adventure (in Trump Casinos and Hotels) when discussing the early discussions between the company that was to become Trump Media (DWAC) and the former President. Forbes said in a headline “Trump had a public company before and it was a disaster”.
As the old phrase goes - investors, ‘you have been warned’.
