Donald Trump’s new social media SPAC, explained

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Donald Trump’s new social media SPAC, explained
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It’s not just a blog this time.

SPAC mergers often involve a parallel funding round known as the “private investment in public equity,” or PIPE. This means that a company that’s merging gets the SPAC moneymoney from outside investors. In return for that money, the outside investors get a chunk of the new company.

The outside investors are usually institutions like banks and pension funds. These investors often add legitimacy — even prestige — by having kicked the tires on the company. That can make other investors more comfortable with the SPAC.Trump’s merger plan makes no mention of a PIPE. This is honestly very funny! Remember how we talked earlier about Trump’s ambitions to take on Disney, Amazon, and CNN? Okay. So the pile of money that he’s getting from the SPAC is about $300 million.

I have to also imagine that there’s an element of financial gamesmanship here. Trump has exploited tax loopholes for decades. He’s pushed banks to grant him risky loans, and when those loans went bad, he’d go to extreme lengths to put them off — like when he sued Deutsche Bank and claimed he shouldn’t pay them backWell, remember meme stocks? Donald Trump had a whole meme presidency.

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