Tesla CEO Elon Musk’s whimsical-then-serious offer to buy Twitter could claim at least one unexpected victim as collateral damage: Donald Trump’s social-media startup, Truth Social.
Musk first offered to buy the social-media network and take it private on April 14, and it wasn’t clear he could pull it off. But Musk has managed to arrange financing and now has a deal. Musk and a group of financiers will pay $54.20 per share, his original offer, which is about 20% higher than the pre-offer share price and 38% higher than before Musk first revealed an ownership stake in Twitter.
What’s good for Twitter shareholders is bad for Digital World Acquisition Corp., the holding company for Donald Trump’s new social-media network, Truth Social. Last fall, DWAC, (DWAC) a blank-check startup, said it would acquire a new Trump umbrella company, Trump Media & Technology Group, which includes Truth Social and other properties still to be rolled out. DWAC went from virtually unknown to white hot, with the shares soaring from a nominal $10 to a peak of nearly $98 on March 4. Trump’s celebrity and power, it seemed, would make Truth Social an instant game-changer.
Now, not so much. DWAC shares have plunged by 63% since the March 4 peak, to about $36. They fell 13% in one day on April 25, when Twitter signaled it would accept Musk’s offer. The market clearly believes a Twitter run privately by Musk, with less public accountability, will reduce the need for an alternative network for users who either shun Twitter, or aren’t allowed to use it.
Musk wants changes at Twitter, including more permissive “free speech.” In the political world, this is code for letting mostly conservative propagandists say whatever they want on social media, with no bothersome fact-checking or concern about possible consequences. The most obvious reference point is Twitter’s Jan. 9, 2021 decision to ban then-President Donald Trump, three days after the riots at the U.S. Capitol. After the riots, Trump praised his followers and vowed protection for them, which Twitter interpreted, given the context, as “glorification of violence.” That violated Twitter rules, justifying suspension.
Musk isn’t an avowed Trump supporter, and he said recently, “I prefer to stay out of politics.” But Musk is Trump-y. He’s libertarian in his leanings. Musk defied government lockdown rules in the early days of the COVID pandemic in 2020 to keep Tesla’s California plant running, risking personal arrest. He’s anti-union. He clearly thinks government rules meant to govern CEO behavior don’t apply to him. He’s sophomoric, making occasional tee-hee weed jokes on Twitter and elsewhere. He also seems to dislike President Joe Biden, whom he called a “damp sock puppet” in January, bristling at Biden’s refusal to acknowledge Tesla’s leading role in EV production.
In Trumpworld, Musk’s purchase of Twitter can only mean one thing: Reinstating Trump’s Twitter account and letting him spew anything he wants to. It’s not clear Musk would do that, but it would certainly be easier for Twitter to welcome Trump back as a private company than as a public one that would have to deal with shareholder pressure and inevitable calls for a boycott.
Would Trump come back to Twitter?
Once Musk has full control of Twitter, if he invites Trump back, would Trump come? What a fun question that is! On April 25, Trump told Fox News he would stay on Truth Social, his own company, and stay off Twitter. But Musk hasn't made the offer yet. Trump is too proud to accept an invitation that hasn't been offered, then suffer the embarrassment of being shunned again.
If Trump could return to Twitter, it's hard to believe he wouldn't. At his peak, he had 89 million Twitter followers, more than all but a handful of celebrities. Truth Social isn’t fully up and running yet, but it’s hard to see how Trump’s following there could ever match what he had on Twitter. At the moment, Trump has just 1.5 million Truth Social followers, which might be the platform's entire audience. Trump has only posted once, in February, though he says he will become a regular Truth Social contributor soon.
Truth Social has had a rocky rollout, and has plunged in popularity as a downloadable app since its February debut. Trump himself has stayed away reportedly because he “wants it to be a hit first.” Yet Trump is supposedly angry about Truth Social’s buggy rollout, slow uptake and mocking reviews. if Trump won’t post for fear of failure, then his followers have no reason to be there, leaving Truth Social with neither chicken nor egg.
So it seems safe to conclude that yes, Trump would love to pick up where he left off on Twitter. And of course he could have accounts on both. But if he resurfaced on Twitter, what would be the point of Truth Social? It’s hard to see any point at all. There are already a couple of fringe social media networks for right-wingers, such as Parler and Gab. Many prominent conservatives—Sen. Ted Cruz, House Minority Leader Kevin McCarthy, broadcaster Sean Hannity—are regular voices on Twitter, which has never banned conservative voices just because they’re conservative. Twitter only tries to ban lies, misinformation and harmful content, which are more likely to come from far-right conservatives than from any other political group.
The broader Trump venture, “Trump Media & Technology Group,” may also include some kind of TV or media operation, financial technology offerings and a whole range of other products and services, according to the company’s regulatory filings. So in theory, the whole thing doesn’t depend on Truth Social, even though that’s been the first launch.
Trump, however, is well known for ventures that aimed to profit off his name but flopped, including Trump University, Trump Steaks, and a variety of Trump properties. Trump makes money off his name, and often structures deals so that he gets paid whether the underlying business succeeds or not.
If Trump were to rejoin Twitter, another interesting question is whether he would be violating a fiduciary duty to DWAC shareholders by essentially selling out his own social media network in favor of one that clearly has more heft. Whatever the outcome, if Musk’s purchase of Twitter would surely have some impact on Truth Social that the parent company, as a public entity, will have to report to the Securities and Exchange Commission—which Elon Musk loathes.
Ironies abound. As Musk takes Twitter private, he will absolve the company of most public reporting, while perhaps forcing Trump’s company to acknowledge uncomfortable new developments affecting shareholders. And if Musk offers Trump his former perch on Twitter, it could harm DWAC shareholders who bought into the company as a way of supporting their man Trump. Perhaps the one thing Musk and Trump have most in common is the amount of work they create for lawyers.
Editor’s note: This is an updated version of a story initially published on April 14, 2022.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips.