New details have emerged Monday with an 8-K filing.
1. PIPE Details
One of the mysteries of the SPAC deal announced between Digital World Acquisition Corp (DWAC) and Trump Media & Technology Group was the investors and details of the PIPE. It was announced over the weekend that $1 billion is being invested in the deal as part of the PIPE. Preferred stock is being offered to PIPE investors at an initial conversion price per share of $33.60.
The conversion price represents a discount to the current DWAC price, which could be adjusted.
“If the VWAP of the combined entity for the 10 trading days after the closing of the business combination is at or above $56, no downward adjustment will occur. If the closing VWAP is below $56, then the conversion price shall be adjusted to the greater of a 40 percent discount to the closing VWAP and the floor price of $10,” the press release reads.
2. SEC Probe
Also included in the 8-K was news that a request for information came from FINRA regarding the deal announcement. Additionally, DWAC received an information for documents from the SEC. The SEC probe is specifically looking for documents about board of directors meetings, policies and procedures for trading, telephone numbers, email addresses and investor identities.
3. Using Rumble
TMTG confirmed that it is using Rumble Cloud for application servers and database servers. Rumble, which is going public with CF Acquisition Corp VI (CFVI), operates a similar media brand aimed at non-censorship.
CFVI SPAC CEO Howard Lutnick told Bloomberg Friday that Rumble had a partnership with DWAC, sending shares higher.
4. Taking On Twitter, Netflix
An initial presentation from DWAC and TMTG centered on taking on large technology companies in social media and media, specifically ones that had censored Trump in the past. The new presentation released Monday leaned heavily on comparing the company to Twitter Inc (TWTR) and Netflix (NFLX) with the respective Truth Social and TMTG+ offerings.
Truth Social is seeking to provide an open, free and honest global platform “without discriminating against political ideology.”
TMTG+ will offer on-demand streaming and wants to offer “non-work entertainment” for consumers.
5. Subscriber Projections
For the first time, the Trump SPAC deal is announcing details on its subscriber potentials. The company is forecasting to hit 81 million users by 2026 for Truth Social. The yet to be released app is forecasted to have 16 million users in 2022. Projections for Truth Social users are based on a Politico poll of registered voters, according to the presentation.
For TMTG+, the company sees subscribers hitting 40 million by 2026, which is less than 20 percent of current Netflix subscribers.
6. Monetizing Users
TMTG is forecasting to have 5 percent of its Truth Social users as monetized in 2022. The company sees hitting 26 percent of Truth Social users monetized by 2026. The company sees hitting average revenue per user of $13.50 by 2026, which is a 43 percent discount to Twitter’s current $23.76 average revenue per user, the company said.
For TMTG+, the company is forecasting a $9 monthly fee by the year 2026.
“TMTG+ could deliver a price point closer to that of Netflix given President Trump’s highly enthused base.”
Netflix has an average revenue per user of $11.73 monthly. The Walt Disney Company (DIS) streaming platform Disney+ has a monthly average revenue per user of $4.16.
7. Revenue Projections
Given the forecasts for the main TMTG units, the company has forecasted its revenue for each year 2022 through 2026, broken down as follows:
2022: $1 million
2023: $114.1 million
2024: $835 million
2025: $1.8 billion
2026: $3.7 billion
Digital World Acquisition Corp. shares lost 2.58 percent Monday, closing at $43.81.
By Chris Katje
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