Rumors About a Trump SPAC Are Brewing, Get Ready

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Mar. 24 2021, Published 11:23 a.m. ET

Rumors aren't hard to come by, but some stick more than others. Just a few months after Trump left his post in the White House, reports claim that he's eyeing a SPAC (special purpose acquisition company) to take his organization public.

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This hasn't been confirmed yet, but there are signs that point to new ventures for former President Trump nonetheless. 

Trump might be eyeing a startup SPAC.

The Trump Organization comes to mind first when you hear about the potential SPAC, but it might not be the real estate company that's considering making a reverse merger deal. When asked about the Trump SPAC, one of his advisers, Jason Miller, told Fox News that Trump plans to return "to social media in probably about two or three months here with his own platform."

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During the 2020 election, Trump billowed claims of election fraud and social media censorship. On Jan. 8, Twitter permanently suspended Trump's account based on the belief that he used his platform to incite violence, which ultimately led to the deadly attack on the Capitol building.

In protest, Trump's fans have spent the last year or so flocking to platforms like Parler—a right-wing social media site that claims to be for free speech. Ironically, the app (led by CEO and founder John Matze) was banned from app stores for its part in the violence as well.

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Miller's hint that Trump might start his own social media startup invites speculation about a risky startup SPAC. Alternatively, it could become a subsidiary of The Trump Organization as the parent company merges in a stock market deal. 

The 'celebrity SPAC' dilemma in the Trump case

Since the SEC facilitates and authorizes public stock trading in a U.S. market that holds $6 trillion dollars, it holds a level of responsibility. On March 10, the SEC warned investors about the growing trend toward SPACs in general and the fact that many of them are spearheaded by prominent and newsworthy figures like celebrities. 

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Jay-Z, Jessica Alba, and potentially Trump are all big names in the public market these days. Even if their reasons for going public differ, they're all able to use their platform to draw demand. This allows them to forgo the traditional roadshow process in IPOs and use a SPAC instead. 

SPACs have two years to go public. At the time of the SEC's warning about celebrity SPACs, a full $103 billion was scheduled for SPAC-funded capital during the two-year period. That's a lot of potential for lucrative returns, but it's also a massive opportunity for wishful thinking on behalf of small-time retail investors. 

Nothing has been confirmed yet in the Trump SPAC.

The Trump SPAC hasn't been confirmed yet by any non-anonymous executive, including Donald Trump Jr. who has stated that he isn't involved in any SPAC dealings. Investors should wait for the final word before getting their hopes up or their dreams crushed (depending on which side of the aisle you stand on). 

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