This Is How Trump’s Social-Media Business Planned For His Conviction Before He Was Even Charged

6 months ago

Forbes reporter Zach Everson joins "Forbes Newsroom" to discuss how Truth Social planned for his conviction before he was even charged.

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Transcript

00:00 (upbeat music)

00:02 - Hi everybody, I'm Brittany Lewis with Forbes Breaking News.

00:05 Joining me now is my Forbes colleague,

00:07 staff writer, Zach Everson.

00:09 Zach, thank you so much for joining me.

00:11 - Thanks for having me on again, Brittany.

00:14 - Big news out of New York City.

00:16 Last week, former president Donald Trump was convicted

00:19 on all 34 felony counts of falsifying business records.

00:23 But you had an interesting take for Forbes.

00:26 You've reported this, that Trump's social media business

00:29 planned for his conviction before he was even charged.

00:33 So take us to the planning.

00:35 When did that start and what did that look like?

00:37 - The earliest that we saw it publicly

00:41 was back in October 21, I believe,

00:43 with the merger agreement

00:45 between Digital World Acquisition Corp,

00:47 which was the SPAC,

00:49 that merged with Trump Media Technology Group,

00:51 which is the parent company of Truth Social.

00:54 And they had a couple clauses in there

00:56 that were very interesting

00:57 and not typical boilerplate in these merger agreements.

01:02 They had announced that there would be,

01:03 they had said there were gonna be

01:05 two possible material disruptive events

01:07 that they identified.

01:09 One of them would be Trump announcing

01:11 he would run for public office,

01:12 and the other would be Trump being convicted of a felony.

01:15 And now the company is dealing with both

01:17 of those material disruptive events.

01:20 - So the company is dealing with both of these.

01:22 I know, I'm not sure about your contract,

01:24 but in mine, that does not have that type of clause.

01:27 So you're saying this isn't normal for a business to have?

01:30 - No, and I'm gonna go reread mine.

01:34 I don't anticipate any felony convictions

01:36 for myself coming through anytime soon,

01:37 but I probably should check that out.

01:39 But yeah, yeah, so I spoke with three experts

01:42 in IPOs and SPACs, and they said,

01:45 yeah, this is not common language

01:47 to rule this out for a felony.

01:48 I mean, obviously the presidential carve-out

01:50 was something explicitly for Trump,

01:52 but they said the same thing with the felony conviction,

01:55 that that is not something you would typically find

01:58 in these documents.

01:59 - So what did the contingency plan say

02:02 if these material disruptive events happened,

02:04 like Trump is convicted of a felony,

02:06 like if he announced he was running for office,

02:09 because both are happening simultaneously?

02:11 - Right, well, the phrase they used to quote is,

02:15 "The company's principal ownership and position in the,"

02:17 or excuse me, "The company principal's ownership

02:19 "and position in the company shall be structured

02:21 "in such a way as to eliminate the need

02:23 "for restructuring of ownership or changes in position

02:26 "were a material disruptive event to occur."

02:29 That is the extent, there are no details at all about that.

02:31 So if you're an investor, I'm not sure

02:32 what you're supposed to make out of this.

02:34 What it appears that meant though in hindsight

02:37 is that they have minimized Trump's role in the company

02:40 beyond owning about 65% of it.

02:43 He's not an executive with the company,

02:45 he's not even on the board of directors.

02:47 So the experts that I reached out to said that,

02:50 yeah, his conviction is not really gonna disrupt

02:53 the company.

02:54 - So can you talk about, since he isn't the CEO

02:57 or on the board of directors, who is,

03:00 and how does his status as a convicted felon impact them?

03:05 - Well, if you can't get Donald Trump

03:08 on the board of directors, what's the next best thing?

03:11 Donald Trump Jr.

03:12 He is on the board of directors

03:14 as are three former Trump administration officials,

03:16 Kash Patel, Robert Lighthizer, and Linda McMahon.

03:20 And Devin Noon is the former Republican congressman

03:23 from California who I believe sued a account

03:27 over a fictional cow.

03:29 He is currently the CEO.

03:31 So you've certainly got some Trump loyalists

03:33 who are in charge of this company.

03:34 So where he's not directly,

03:36 doesn't have those roles directly,

03:38 no doubt he has some sway over the people who do.

03:41 - So does his conviction impact this business at all?

03:44 - You know, it's tough to say so far.

03:48 It doesn't look like it.

03:49 Right now it's trading at about $45 a share,

03:52 which is about halfway between it's,

03:55 you know, it's a little bit,

03:56 about half of what its high was,

03:58 but still $20 off of its 50,

04:00 off of its low since it started trading.

04:02 So it hasn't really affected the stock price.

04:04 I did see some people on Twitter.

04:06 It did go down right away after the conviction,

04:09 but there were people out there on Twitter saying,

04:10 support Trump, go ahead, buy some stock,

04:13 buy one share, help him out.

04:15 So no idea if those were real people,

04:17 if they were bots, whatever,

04:18 but you know,

04:20 this stock does seem to be holding pretty steady these days.

04:23 - Trump, as you noted, owns 65% of Truth Social.

04:27 Did this news impact his net worth?

04:30 Because as we know, his shares of Truth Social

04:32 are a huge component of his fortune.

04:34 - Yeah, you know, and it's a part of his fortune

04:38 that we see going up and down pretty regularly

04:40 compared to the rest of it,

04:41 which is, you know,

04:42 real estate holdings that don't fluctuate by the minute.

04:46 So you're seeing it fluctuate, but no,

04:47 I mean, overall, he's still worth

04:49 billions and billions of dollars.

04:51 You know, what really matters for him

04:53 is what the value of the stock is gonna be worth

04:56 when he is no longer tied up

04:58 and can actually sell some of his shares

05:00 to get some cash that he might need to, you know,

05:02 pay fines, pay mortgages, things of that nature.

05:05 - What are you looking out for next

05:07 when it comes to Truth Social

05:08 in light of Trump's conviction?

05:10 - Well, the board of directors

05:13 can allow him to sell his shares early,

05:17 which is the thing we've been watching out

05:18 since day one of this.

05:19 Does that happen?

05:20 Obviously there would be some,

05:22 would not be a slam dunk easy move for them to do

05:26 'cause they would probably get a shareholder lawsuit.

05:29 You know, people complaining

05:30 that they bought into this company

05:32 thinking that Donald Trump was connected to it

05:34 and that he'd at least be tied up for five to six months.

05:37 And then all of a sudden that not being the case.

05:38 So that might be an issue right there.

05:40 But that is one of the big things

05:42 that I'm really looking at to see if that happens at all.

05:45 You know, it's also interesting to see

05:47 if there's any movement on the board of directors.

05:49 I don't expect there to be any at all,

05:51 but it is, you know, it is Trump and it is a boardroom.

05:54 And this is a man who's made a lot of money

05:56 by saying you're fired in that circumstance.

05:59 - Is Truth Social, based on your reporting,

06:01 based on what you're observing,

06:03 is it more valuable with Trump connected to it or without?

06:06 - Oh, definitely.

06:08 I mean, I think that's the reason

06:09 that people were buying it in the first place.

06:11 It's essentially a meme stock.

06:13 You know, it's trading well above

06:15 what it should be right now.

06:17 It doesn't make any sense from financial fundamentals,

06:21 my understanding from talking to a few experts in this area.

06:24 It's a meme stock and the attraction

06:25 is completely Donald Trump.

06:26 So if you lose Donald Trump, you know,

06:29 not only are you going to see a significant amount of shares

06:31 hitting the open market, which would cause value to,

06:34 cause prices to go down, but you would certainly see

06:37 a lot of other people bailing on the stock as well.

06:40 - Zach Everson, Per Usual, thanks for your reporting.

06:43 - Thanks for having me on, Brittany.

06:45 (upbeat music)

06:48 (upbeat music)

06:50 (upbeat music)

06:53 [BLANK_AUDIO]

This Is How Trump’s Social-Media Business Planned For His Conviction Before He Was Even Charged

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