Digital World Acquisition Corp. — the special purpose acquisition company (SPAC) that Truth Social needs to go public — revealed in a Securities and Exchange Commission filing Friday that investors have backed out of $139 million in commitments of the $1 billion previously announced by the company.
There’s likely more to come. Investors, who agreed to put up the money nearly a year ago, can now drop their commitments because Digital World missed its initial Sept. 20 deadline to merge with Truth Social.
DWAC is extending the time frame for the deal by three months after shareholders refused to approve its bid for a 12-month extension. But investors can still back out.
It’s just the latest trouble for Digital World and Truth Social.
A key vendor complained last month that Truth Social bills were going unpaid. A major web-hosting operator said Truth Social owed about $1.6 million in contractually obligated payments, an allegation suggesting the operation’s finances are in “significant disarray,” Fox Business News reported.
In another setback, Truth Social’s application for a trademark was turned down last month because its name was too similar to other operations.
Truth Social is hardly the juggernaut some investors had hoped. The social media platform is largely a forum for Trump, who repeatedly posts messages touting himself and reposts articles from right-wing media praising him each day.
Responding comments mostly involve QAnon conspiracies, over-the-top pro-Trump and anti-Joe Biden memes, and cringey comments like: “Ode to the greatest President ever.”
Comments lack the back-and-forth of social media platforms like Twitter that make them more of a dialogue. Most negative comments on Truth Social are buried or vanish from the site, which organizers had promised would be censorship free.
Trump launched Truth Social after he was booted off Twitter in the wake of the Jan. 6, 2021, riot at the U.S. Capitol. Trump has been using the platform much as he did with Twitter — to rail against enemies, complain he’s being victimized and falsely insist he won the 2020 presidential election.
Last month, Digital World warned in an SEC filing that a dip in Trump’s popularity could hurt the business. The filing noted that Truth Social’s success hinges on the “reputation and popularity” of the investigation-plagued Trump, who chairs the Trump Media and Technology Group, which owns and operates the social media platform.
“In order to be successful, TMTG will need millions of those people to register and regularly use TMTG’s platform,” the filing warned. “If President Trump becomes less popular or there are further controversies that damage his credibility or the desire of people to use a platform associated with him,” the planned merger with Digital World “could be adversely affected,” it warned.