With the recent unbanning of former US President Trump's Twitter and Facebook accounts removing a significant chunk of the overall raison d'être behind Truth Social, the project has been floundering recently as its bid to acquire new capital from the SPAC Digital World continues to face stiff regulatory oversight.
As a refresher, Truth Social is a project of the Trump Media and Technology Group (TMTG), which has been pursuing a reverse merger with the SPAC Digital World Acquisition Corp. (DWAC). The merger will furnish TMTG with $293 million in cash proceeds that Digital World raised in its IPO. Additional hundreds of millions of dollars are expected to materialize in the form of PIPE investments. TMTG intends to use this cash influx to construct a conservative-leaning media machine in Trump's image, with these inflows benefitting not just Truth Social – a Twitter-like social media platform – but also providing the seed funding for a subscription-based, "non-woke" video-on-demand service as well as multiple cloud-based offerings under the envisioned "tech stack" suite of products.
However, the planned merger between TMTG and Digital World has been complicated by a spate of ongoing investigations by the SEC and FINRA. Most of these investigations relate to alleged violations of securities law and inappropriate disclosure of pertinent information in the run-up to the merger announcement.
This brings us to the crux of the matter. Bloomberg is now reporting that Truth Social is now resorting to layoffs to conserve its scarce capital, especially as the platform remains unable to access cash from Digital World due to the non-consummation of the merger agreement between the two entities. Reportedly, at least six employees have been laid off recently, including the Chief Technology Officer, William "BJ" Lawson.
Digital World shares, which act as a proxy for the Trump Media and Technology Group in the pre-merger phase, are in the red in today's pre-market, currently trading at a loss of nearly 4 percent.