I was, briefly, a Forbes Reporter in the 1990s. My job was to determine who and who should not be on the Forbes Rich List. I did research on what assets each individual or family had and then looked at the actual valuation of those assets and each individual and family. It was a strange and interesting job. Many of the families whose fortunes we’d try to value (there was a family rich list) actively tried to minimize assets because they didn’t want to appear on the list to avoid attention (and problems). But, there were individuals, who desperately WANTED to be on the list. I had arguments over the phone with billionaires about how much their Picassos and other holdings were actually worth. Trump was always looming for the list and a question mark. So, even though I did not stay at Forbes or continue in business journalism, I’ve always kept in interest in trying to understand how much Trump is worth.
So, I’ve got bad news for this of us, like me, who want Trump to be exposed as the billionaire with no money. He’s about to actually become a billionaire thanks to Truth Social and its looming IPO.
…because of a quirky bit of financial engineering, and maybe the power of Trump’s hyped-up political base, Truth Social’s parent company is set to go public in the coming weeks once it merges with Digital World Acquisition Corporation, a deal that would bring the merged company’s valuation to around $9 billion—a market capitalization on par with Match Group, Skechers, and Lufthansa. Trump’s own stake would be worth nearly $4 billion at current value, which would comfortably cover his current legal expenses.
Yes his partners are suing him to stop his efforts get even more shares (above his current 90%) but they appear to have resolved this lawsuit pretty quickly because they — and Trump — want to get paid.
…on March 9, the threat from that lawsuit seemed to dissipate after the two sides reached a preliminary agreement during a hearing in Delaware Chancery Court. Per the New York Times, the deal “would preserve the two founders’ right to a significant equity stake in the parent company of Truth Social until a judge hears further arguments on the merits of their lawsuit.” The presiding judge, Vice Chancellor Sam Glasscock III, appeared to have no appetite for pushing back the March 22 vote date, saying that “No one is suggesting I should do anything to interfere with the closing,” and later remarking that “I’m pretty confident we can work something out.”
Don’t fall prey to false hope. It is going to happen because it appears that Trump has pulled off his ultimate grift (and has falling forward into cash yet again). The underlying asset — Truth social — is worth essentially nothing because it has very few followers, limited revenues and a limited upside (it’s a “meme”’ stock).
Truth Social hasn’t found mass appeal. It had a paltry 5.4 million total visitors last month, according to Similarweb, and made only $3.4 million from advertising in the first nine months of 2023, according to a regulatory filing by its corporate partner. (For reference: Twitter made more than $1 billion in advertising with 237.8 million daily users in its final quarter as a public company in 2022.) Truth Social’s ads aren’t from, er, prestige brands either—a recent scroll through the app surfaced ads for a “Trump signature trading card,” the website gutcleanseprotocol.com, and Covfefe brand coffee.
Despite the non existent value of the underlying business, Trump’s fame and appeal have gotten his followers and speculators trying to capitalize on a Trump bump in value, to bid the stock up to absurd heights. It’ll come crashing down to nothing but Trump will have cashed out long before that happens.
Understanding Trump’s net worth
Trump has always been a grifter who has used and created fame to get assets and more wealth. He is a terrible businessman and frittered away his family’s investments and wealth in many misguided and poorly run ventures like Trump Atlantic City and more. But, he is very good at convincing wealthy people to give him large assets to replenish and increase his net worth.
Trump’s current net worth is composed of his golf courses — which have limited overall value but are essentially his only source of cash through membership fees and money laundering (which is why Eric Trump sole job is really running the courses — they need the cash) and a few large office buildings which are worth over a billion dollars but are very illiquid. The golf courses — and membership fees — also serve as a money laundering business (as they are cash businesses outside of the US). Everything else, the Trump branded businesses, etc are essentially worthless. And, then there is Truth social which is essentially worthless as a business but is now worth billions as a meme stock.
Turning the fumes of the West Side Highway Project into Billions
Trump, after her took over his Dad’s company in the 80s, went big and hoodwinked government officials in New York to essentially give him formerly undeveloped land on the West Side of New York (the Penn railway yards) to create a giant apartment complex called Riverside South.
It was all BS but Trump used the playbook we see now to delay, bloviate and delay to keep the land and put forward lots of fantasies. In the end, he was able to convince a couple of Hong Kong billionaires to trade his West Side Highway shares (which were worthless) for a 30% share of Bank of America office buildings (now owned by Vornado) that are now the only reason that Trump is a arguably a billionaire.
After the 1994 real estate market crash, Donald Trump was majorly debt, and one of the fallouts was his inability to make payments on Riverside South, a 77-acre site near Lincoln Center that he had bought for $95 million in 1985. It was here that he planned to build a 12,450-unit, mixed-use complex that would have held the world’s tallest building (more on that here). When Chase Manhattan Bank eventually demanded repayment, Trump was bailed out by a consortium of Hong Kong billionaires, which included Henry Cheng Kar-shun, one of the richest developers in the world at the time, and Vincent Lo, considered the Chinese version of Trump for his regularity in the society pages. He sold them 70 percent of the project.
He has since had nothing to do with developing or running the now Vornado buildings (the HK billionaires sold them to a prominent real estate company called Vornado) which have long made up the bulk of his wealth which meant he could run the businesses to the ground (as he did with his other properties). He has, however, borrowed money against these assets (as he looks for cash). The assets have been declining in value — given issues facing commercial real estate post pandemic.
A $1.2 billion mortgage on a San Francisco complex co-owned by former President Donald Trump has landed on a lender watchlist as the cost of floating-rate debt rises.
The owners have the option to extend the loan on the buildings, which include the 52-story tower at 555 California St., for another year, the first of five possible one-year renewals. Trump has a 30% stake in the properties, with Vornado Realty Trust owning the rest.
Higher rates have ramped up the pressure on commercial landlords, causing extensions to become costlier. Debt service costs for the San Francisco properties have increased 38% since the loan’s origination, according to a February report on the debt compiled by Bloomberg.
The three buildings, which were appraised at $2.05 billion in March 2021, were nearly 95% occupied at the end of 2022, Vornado said in a filing earlier this month. The February report said rent revenue was more than two times the cost of servicing the debt on the properties.
While the Trump and Vornado properties has been able to lure tenants, San Francisco’s office market has suffered more than most US cities from falling demand given the rise in remote work and tech industry layoffs. The city’s office vacancy rate climbed to 27.6% in the fourth quarter, CBRE Group Inc. reported.
The Trump Golf Courses Money Laundering Operation
The Trump golf courses are a fascinating and nightmarish story that, in many ways, created the model for Trump’s business going forward. Essentially, he used his brand to buy golf courses to sucker wealthy, wanna be hangers on to join. Then, he took as much money as he could from the suckers.
President Trump, who has said he doesn't like to settle lawsuits, has settled with former members at his golf course in Jupiter, Fla.
Golfers who held memberships to the Ritz-Carlton Golf Course before Trump bought it 2012 contend he failed to give back their refundable deposits, ranging from $35,000 to $210,000, after the ownership change.
In the settlement entered in U.S. District Court Friday, Trump National Golf Club agreed to pay nearly $5.44 million to the members, who sued in a class action. After legal fees, each of the plaintiffs will end up with about 71% of the refunds they sought, according to the ruling.
Trump has also bought money losing premier golf courses in Scotland and Ireland and used them to seemingly launder money from Russian investors. He — just like in the US — somehow stopped the Scottish government from fully investigating this issue.
Trump has frequently faced opposition in Scotland with regards to his resorts at Turnberry in Ayrshire and Aberdeenshire. Trump spent more than $300 million in cash purchasing and developing the Scottish resorts, neither of which has turned a profit.
Down the years, Trump has faced calls to be investigated over how he was able to purchase the properties, and has faced criticism over destruction of the local sand dune systems.
Truth Social — The ultimate grift and payday for Trump
Now, Trump is about to get his ultimate payday — thanks to useful idiots who were contestants on “The Apprentice” and came to Trump and sold him the idea and gave him 90% of the stock. His only investment for the stock? The time and requirement to post on the new social media app, rather than Twitter. Trump has invested essentially $0 in the venture. The founders had the — unfortunately correct insight — that even though their idea for a business and their execution of the idea was absurd — it didn’t matter because of the legions of Trump fans who will just give him money no matter what.
Jay Ritter, a finance professor at the University of Florida, says meme stocks often depend on the “greater fool theory of investing,” meaning rational investors might buy in expecting the stock price to rise and betting that they can sell their shares to a greater fool willing to buy them at a higher price. In this case, however, Ritter speculates there is an inordinate number of individual retail investors compared to institutional investors, such as hedge funds, that normally own SPAC shares prior to a merger. “Here you’ve got ideology involved [too]—as far as I can tell, the vast majority of DWAC investors are Trump political investors, and they’re to some degree putting their money where their mouth is… My suspicion is most of them have bought the stock as a show of political support.” In this way, Trump is conducting yet another public fundraising from his supporters—this time through the public markets.
Now, MAGA is buying Truth Social shares and traders in the market are — as a result — bidding it up to be worth several billion dollars (even though the underlying business looks to be worth something in the millions at best). And, unfortunately, because Trump has 90% of the shares of this company and controls the board of directors he will, once the money comes in, be able to waive away the standard 6 month waiting period post IPO and just cash in.
Trump might be able to borrow money with his stock as collateral as a way to gain access to money more quickly, but he would have to either get an exemption from the post-merger company or just move ahead without one and hope that the board lets it slide, Ohlrogge said, since the terms of the agreement with DWAC don’t allow it. “If there were a bank that did take such a deal [allowing Trump to use his stock as collateral], it would raise serious concerns that the bank is doing it for reasons other than a belief it is a profitable lending opportunity,” he said. “Namely, it would raise concerns that the bank is doing it in order to win influence with someone who might become US president. If that bank were affiliated directly or indirectly with a foreign government, it would be even more concerning still.”
In the end, if Trump does dump his stock quickly, the value of the shares are very likely to head towards zero (given the non existent value of the business) but he will likely have pocketed hundreds of millions, if not billions before then.
So, Trump will soon be very rich and able to self fund, pay for his legal bills. It sucks but we can — and will — still beat him. And, of course, if history repeats itself, Trump will find a way to lose the money he makes from Truth Social, eventually.