Trump is faced with the choice of money or influence

So far, Trump has been adamant that he will stay on Trump Media’s Truth Social platform. He does have some contractual obligations with Truth Social – he is obliged to make his posts available exclusively to the platform at least six hours before sharing them on any other site – but there are carve-outs for political messages and fund-raising.

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With only about four million followers on Truth Social against the 88 million he had on Twitter before he was booted off that platform on January 8 last year after his supporters invaded the Capitol, the issues of reach and visibility would have become larger for Trump after he declared last week that he would again seek the US presidency in 2024.

Truth Social only has just over 500,000 active daily users and less than 2 million monthly users. Twitter has – or at least had – more than 200 million active daily users.

The qualification of Twitter’s numbers relates to the maelstrom that has engulfed the platform since Elon Musk gained control late last month. Musk, who paid $US44 billion to acquire Twitter, has sacked more than half its 75000 employees, with another 1200 or so quitting or forced out last week.

There is a major questionmark over whether Twitter can continue to operate with only a third of the employees it once had, with advertisers who have provided about 90 per cent of its revenue withdrawing amid concerns that Musk’s slashing off staff and commitment to freedom of speech could see the site flooded with abusive and racists posts, and worse.

Twitter users are fleeing while predicting the demise of a business that loses money and now has to service the $US13 billion of debt Musk took on as part of the funding for his bid.

Assuming Twitter survives (which is no certainty, given Musk’s erratic, eccentric and gaffe-riddled performance in his first weeks as its owner), it remains a vastly larger and more influential channel with a far more diverse audience for Trump than Truth Social, which is an echo chamber for hardcore Trumpists.

If he wants to mount a serious tilt at the presidency, Trump will be tempted to regain the spotlight he once enjoyed, where Twitter was his platform of choice for broadcasting his messages and thoughts and provoking his critics.

Truth Social would itself have a very limited future if it lost Trump or had to share his posts with Twitter. He is its core asset.

It is instructive that DWAC’s share price has fluctuated with perceptions of Trump’s political fortunes. It fell sharply after the FBI raided Mar-a-Lago searching for classified documents. It fell again after the less-than-impressive showing by the Republicans in the midterms and by those Trump had backed in particular. The price then rose when Trump announced he was going to run again for the presidency.

There is, therefore, a clear correlation between perceptions of Trump’s political fortunes and the sharemarket valuation of DWAC and, through it, of Trump Media.

Trump’s myriad legal issues, relating to his own Trump organisation, the documents he held at Mar-a-Lago, the January 6 events at the capitol and his efforts to overturn voting at the 2020 election, are a threat to the execution and value of the DWAC deal.

So too are US Securities and Exchange Commission (SEC) and Department of Justice investigations of the lead up to the announcement of the proposed merger of DWAC and Trump Media. SPACs aren’t allowed to have specific acquisitions in mind or agreed when they raise funds. That’s a rule designed to ensure the structure can’t be used to avoid the onerous disclosure rules and investor protections provided by conventional public offerings.

There were discussions between DWAC’s sponsors and Trump well before the deal was announced. DWAC has said they weren’t substantial but a whistleblower has claimed they were far more extensive and detailed and violated the SEC’s regulations.

The US agencies are also investigating suspicious trading in DWAC’s shares ahead of the deal being announced.

Until the investigations have concluded, presumably satisfactorily for DWAC, there is considerable uncertainty as to whether the merger will be allowed to be consummated, regardless of what shareholders decide. That might explain why some of the hedge funds who committed the extra $US1 billion to the deal have withdrawn their pledges.

The situation is, as one might expect given that Trump, Musk and federal agencies are involved, a messy and moving saga, with significant dollars at risk for all the parties and their fates dependent on uncertain outcomes.

If the merger of DWAC and Trump Media were not to proceed and Trump couldn’t get his hands on the cash in the SPAC, of course, it would be an almost foregone conclusion that Trump would return to Twitter unless he could find someone else to fund his media ownership ambitions.

Whether that would help or hinder Musk in his efforts to pursue financial stability for Twitter (and his own finances) is an open question.