There are red flags that Trump's new media company may be a mirage that investors may pump and dump, according to a new report.
In his Popular Information newsletter, Judd Legum notes a number of red flags.
"Initially, TMTG suggested that Truth Social was based on "proprietary" technology. It was later forced to admit that the code was taken from Mastodon, an open-sourced decentralized social network that anyone can use," he reported. "TMTG was also subject to criticism for failing to announce 'anyone involved in building its supposed technology.'"
The company's purported launch date also came and went in November.
Legum noted the compromising situation he could be in if the money were coming from foreign power, like the Kingdom of Saudi Arabia.
"But who is investing $1 billion in Trump's virtually non-existent company? TMTG does not say. They identify the source of the cash as "a diverse group of institutional investors." The identity of the investors is critical in light of Trump's future political ambitions. He may run for president again in 2024. What if, for example, the investors include the Saudi sovereign wealth fund?" he wondered.
Legum gave his analysis of the Private Investment in Public Entity (PIPE) fundraising effort currently underway.
"The structure of the PIPE deal, however, suggests that these investors are less interested in influencing a future president than fleecing retail traders for a quick buck," he wrote. "In other words, there seems to be a real push by these investors to flip these stocks immediately. The investors, whoever they are, seem to be keenly aware that time is not on their side. They want to be able to cash out before anyone gets too much information about how the company actually performs."
If it is a grift, it's Trump's base that will be stuck with the bill.
"It's a deal that makes Trump money and the investors money. The people holding the bag will be retail investors paying premium prices for a mirage of a company because they like Trump," he explained.
Read the full report.