Shareholders of Digital World Acquisition Corp. (DWAC) voted on March 22 to merge with Trump Media & Technology Group, which operates the social media platform Truth Social. They also approved changing the company's name to Trump Media & Technology Group TMTG), which will begin trading on the Nasdaq stock exchange this morning under the ticker symbols DJT and DJTWW.

Former president and current presumptive GOP presidential nominee Donald Trump owns roughly 58% of the newly formed company. Trump stands to make in the ballpark of $3.9 billion from Digital World Acquisition's merger with TMTG. Is the new stock a no-brainer buy now that the merger with the special purpose acquisition company (SPAC) has been finalized?

A landslide for Trump

Trump has cruised to victories in the race to win the 2024 GOP presidential nomination. However, his opponents often secured significant percentages of the overall vote in the state primaries and caucuses, with former U.N. ambassador and South Carolina governor Nikki Haley even winning two contests.

The Digital World shareholder vote, though, was a landslide for Trump. More than 26.6 million shares were voted in favor of the merger with TMTG compared to 66,010 against and 51,890 abstaining.

Trump is without question a major winner with the merger. He's the biggest shareholder in TMTG and owns nearly 78.8 million shares of the combined company. Based on the closing share price of Digital World on Monday, Trump could add in the ballpark of $3.9 billion to his net worth.

The former president won't be actively involved in the company's management or its board. Several of his close associates were voted in as directors, including his son Donald Trump Jr.

Trump ally Devin Nunes, who previously represented California's 22nd congressional district in the U.S. House of Representatives, will be CEO and be on the board.

Looking at the business

Digital World is a "blank check" company whose only purpose is to merge with another company. The real business to look at with the merger is TMTG's. And TMTG's business revolves around Truth Social.

After its general release launch in early 2022, Truth Social rapidly gained users. At last count, around 8.9 million people had signed up on the app. But it's unclear how many of those are active users. TMTG argues that relying on key performance indicators such as active users and average revenue per user "could potentially divert its focus from strategic evaluations with respect to the progress and growth of its business."

We do know some of TMTG's financial metrics, though, due to Digital World's regulatory filings related to the proposed merger. Over the nine months ending Sept. 30, 2023, TMTG generated revenue of nearly $3.4 million. It posted a loss of roughly $49 million during the period.

TMTG also acknowledged its unique risks related to its associations with Trump. For example, a survey conducted by The Hill and HarrisX found that only one-third of voters would use a social media platform linked to the former president.

In a regulatory filing, TMTG noted that an adverse outcome in any of Trump's legal proceedings could hurt the company and Truth Social. Trump currently faces criminal trials for allegations including falsifying business records to cover up payoffs to women who said they had sexual relations with him, withholding government documents, obstruction of justice, and conspiring to overturn the results of the 2020 presidential election. The former president is also appealing civil suits that he lost related to allegations of fraud and defamation of character.

A no-brainer

Posts on TMTG's Truth Social platform are called "truths" but often are really just opinions. I won't call my opinion a "truth," but I think it's justified: Investing in TMTG after the merger would be unwise.

Many SPAC deals haven't turned out positively. I don't expect this one will, either. Investing in TMTG isn't smart based on valuation alone. Digital World's market cap was $1.86 billion at the market close on Monday. That's well over 400 times TMTG's annual sales. I also think that investors should pay close attention to the risks that TMTG acknowledges.

Investing decisions should be based on the potential to make solid returns rather than political preferences. Buying TMTG stock emphatically isn't a no-brainer. But avoiding it is.