Gamestop, Set, Match: How Donald Trump Got Richer than Ever, Beat Tish James, and Sold Out his Own People

Trump Media’s IPO is a great illustration of the century’s most dangerous con man at work. And he's laughing all the way.

In a perfect metaphor for life in the 2024 timeline, Donald Trump became a billionaire one day after getting a court date for his first criminal trial.

As of today, Trump has more money and more financial power than ever before in his life, thanks to the IPO of a mostly fake company called Trump Media and Technology Group (let’s call it Trump Media; its ticker symbol is DJT, of course). 

As I’m sure you know, Trump founded a terrible social media platform called Truth Social in 2021.  Truth Social is doing very badly.  In three quarters of 2023, it had less than $4 million in revenue and posted a $49 million operating loss.  Users were down more than 35% compared with 2022.  The product is in the toilet.

And yet, you probably also know that Trump’s stake in Trump Media, which owns this piece of junk, was worth $4 billion yesterday, and $5 billion today.  How is that possible?

Scams. Three of them in fact: one secretive, one semi-secret, and one quite public.

Midjourney missed this one - the prompt was “Donald Trump laughing while he runs away from Letitia James, old master style.” But this image made me even angrier, so I kept it.

1.        SPAC and Scam

Zoom back to September, 2021, when Trump Media and Truth Social launched.  Around the same time, a “special purpose acquisition company” (SPAC) called Digital World Acquisition Company (DWAC) was also formed – apparently by associates of Trump, though by whom exactly is still unclear.

What is a SPAC?  Unlike normal companies, SPACs don’t make or do anything; they look for companies to take public through a merger.  For example, if you’re running a tech startup and you’re not quite successful enough for an IPO, a SPAC provides an alternate route to get to the market.  The SPAC buys you, and either it’s already a public company or goes public, and presto: now people can buy shares in your company (and you can cash out – more on that in a moment).  As a bonus, since it’s the SPAC that is technically public, not the actual startup, many of the traditional disclosures required at IPO time don’t have to be made.  You can hide more.

DWAC was always about one particular acquisition: Trump Media.  But DWAC’s founders concealed that fact, because that way they could set their share price low – around $10 per share.  A month later, in October 2021, DWAC announced its plans to merge with Trump Media, and its value skyrocketed to $175 a share.

You can see the scam, right? Insiders bought into DWAC at an artificially low price, then disclosed the celebrity tie in, and the stock price ballooned. 

To be clear, the high price was based on nothing real: at that time, Truth Social didn’t even exist, and Trump Media didn’t even have a CEO.  (It quickly hired one: Devin Nunes, the congressman who went so far to help Trump that he shared classified materials with unknown individuals in the shrubbery around the White House.) All of DWAC’s value was based on Trump’s name, and the adoration for him among the MAGA base. 

The SEC quickly launched a fraud investigation, which delayed the merger of for over two years.  Many institutional investors bailed. Finally, in June, 2023 – after DWAC fired one CEO and hired another – DWAC and the SEC settled the claim.   Said the SEC in its settlement announcement, “DWAC misled investors and the SEC by failing to disclose that it had formulated a plan to acquire and was pursuing the acquisition of Trump Media.”

What was the penalty for this fraud?  All of $18 million – which is peanuts, considering the total deal value is over $5 billion (aka $5,000 million).  This was an unbelievable miscarriage of justice.  It’s barely a slap on the wrist.

As reported by Michael Hitzlik at the L.A. Times, this pattern is common in celebrity-driven SPACs.  Canny insiders partner with a celebrity (Trump, Jay-Z, Shaq)  to create a company out of nothing.  Then, fans buy the stock out of fandom, delusion, or both, and the value shoots up before eventually settling down to earth.  Insiders sell high and make a fortune, while the fans who bought high lose a ton of money when the bubble pops. It's a dirty business.

DWAC’s price eventually fell to $15 a share in October 2023.

In the words of stock-hyper Jim Cramer, quoted by Hitzlik, “these newer SPACs increasingly feel like an inside joke for the super-rich and a way for celebrities to monetize their reputations.”  

First scam complete.

2.        The Big Short Long

DWAC’s grift was just getting started, though. With the SEC placated by its penny-ante settlement, the merger went forward, and DWAC’s stock price rebounded to $49.  The IPO took place today (March 26, 2024) and the stock surged again, hitting $68 at noon and finishing at $58.

Trump’s share is, as of this moment, worth over $5 billion.  That’s right – he made a billion dollars today.  How was your day?