(Bloomberg Opinion) -- Donald Trump’s new social media enterprise announced on Saturday that the blank-check company it set up to monetize the former president’s digital and political mojo has raised $1 billion — without identifying the members of the “diverse group of institutional investors” backing him.
Trump, a disinformation kingpin exiled from mainstream social media platforms, has positioned his gossamer startup, Truth Social, as a vehicle for battling “censorship and political discrimination” and the “tyranny of Big Tech.” It’s also a convenient way for Trump to continue his life’s work: separating investors and fans from their wallets by pitching promises that he routinely fails to keep.
To be sure, some investors have already done well in this charade. When the Trump Media and Technology Group announced in October that it would use Digital World Acquisition Corp., a special purpose acquisition company (or SPAC) to go public, the SPAC’s shares skyrocketed from $9.96 a share to $94.20 in two days. The stock has since settled to $44.97, but hedge funds and others that bought into DWAC early have enjoyed a handsome return.
On the other hand, the only publicly traded company Trump has managed, his ill-fated casino gambit, made multiple tours through bankruptcy, burning investors, banks and employees along the way and leaving behind a haunting collection of craters in Atlantic City. Trump, backstopped by his father, survived that meltdown, but few others did. Trump Media and Truth Social have already unfurled some red flags. They plan to open their doors early next year, but as my colleague Matt Levine has noted, they are doing so without a detailed business plan or financial projections. Trump Media also hasn’t completed its merger with DWAC or made associated securities filings. And SPACs have had shoddy track records thus far, underperforming more standard initial public offerings. (The Securities and Exchange Commission is already taking a look at DWAC, including requesting records tied to the identities of certain investors, the company disclosed on Monday.)
So, caveat emptor.
But there is a another and more consequential worry in all of this. Trump is a former occupant of the Oval Office and is likely to make another presidential bid in 2024. He had his hands on the national security apparatus once before and may well again. The identities of the investors who just tossed $1 billion his way are of interest because anyone able to buy their way into Trump’s good graces by plopping a bag of money on his desk could sway public policy — which makes Trump a national security threat.
What might it mean, for example, if countries such as Saudi Arabia or others in the Middle East have decided to invest in his venture? That’s not an entirely hypothetical question.
Former Treasury Secretary Steven Mnuchin recently launched an investment firm, Liberty Strategic Capital, with funding from the Saudi government and other countries in the Persian Gulf region. Mnuchin closely courted those same countries when he was one of the most powerful U.S. financial regulators in the Trump administration, but avoiding financial conflicts of interest was never a priority for Mnuchin, Trump and many others on that team.
The Trump administration indulged Saudi Arabia even after evidence surfaced that the country orchestrated the murder of journalist Jamal Khashoggi. Mnuchin met personally with Saudi Crown Prince Mohammed Bin Salman after the killing. Bin Salman is chairman of the Saudi fund that has invested in Liberty Strategic Capital. Trump’s White House also went out of its way to support arms deals with the Saudis and the United Arab Emirates, despite congressional opposition, and it backed both countries publicly in their controversial interventions in Yemen’s civil war.
Jared Kushner, Trump’s son-in-law and an enthusiastic envoy to the Middle East when he was a senior White House adviser, is also trying to open an investment firm, with offices in the U.S. and Israel. He has reportedly drawn interest from the Saudis for his new venture, although Qatar and the United Arab Emirates are said to have passed. Maybe they’ll circle back if Trump’s proximity to the White House grows closer.
Trump himself has already been scrambling to pare down more than $1 billion in debt that hung over his pandemic-battered real estate and resort holdings when he lost the presidential election in 2020. He recently agreed to sell his prized but money-losing Washington hotel for $375 million, which would provide the Trump Organization with a $100 million gain, according to the Washington Post. That money helps, particularly with paying off at least $421 million in debt that Trump personally guaranteed and comes due in the next several years, according to the New York Times.
Trump’s indebtedness, his reliance on income from overseas and his refusal to authentically distance himself from his hodgepodge of businesses made him a national security threat as president. That threat will reemerge if he seeks reelection in 2024.
In the meantime, and with Trump still hunting for cash, the $1 billion he just raised through a “private investment in public equity” (or PIPE) must be happy news for the former president. After all, it is a significant multiple of the $293 million DWAC raised when it went public in September. Perhaps that $1 billion merely signals that some investors believe Truth Social is going to be a big hit. Or maybe they’re buying access to Trump. Either way, let’s find out who they are.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
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