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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.
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