Assessing the Long-Term Viability of Politically Exposed Assets: The Case of Trump Media & Technology Group (DJT)

In the post-SPAC era, the intersection of politics and finance has become a high-stakes arena for investors. Trump Media & Technology Group (DJT), a company synonymous with former President Donald Trump's media empire, epitomizes the challenges of managing politically exposed assets (PEAs) in a regulatory landscape increasingly scrutinized by the SEC and other watchdogs. As the company navigates allegations of market manipulation, governance weaknesses, and the shadow of its founder's legal and political controversies, investors must grapple with whether DJT can sustain its relevance—or if it is a cautionary tale of regulatory risk.

Regulatory Scrutiny: A Double-Edged Sword

The SEC's recent focus on SPACs and digital assets has intensified oversight of companies with politically sensitive ties. DJT's history of short-selling disputes and its association with Trump—a figure embroiled in multiple legal cases—has placed it under a microscope. In April 2025, the company demanded an SEC investigation into a $105 million short position by Qube Research & Technologies, alleging potential illegal naked short selling. While the SEC has yet to act, the episode underscores the vulnerability of PEAs to regulatory intervention.

The SEC's 2024 rule changes, which tightened SPAC disclosure requirements, have further complicated DJT's position. These rules mandate greater transparency around conflicts of interest and financial projections—areas where DJT has previously stumbled. For instance, the company disclosed a “material weakness” in its internal controls in early 2025, citing inadequate accounting processes and a lack of experienced personnel. Such disclosures are red flags for investors, as they signal a higher risk of financial restatements and eroded trust.

Governance Risks: The Trump Factor

DJT's governance structure is inextricably linked to its founder. Trump owns 58% of the company, and his influence extends to strategic decisions, including the launch of Truth Social and the accumulation of a $2.5 billion Bitcoin treasury. While this concentration of ownership can drive bold initiatives, it also raises ethical concerns. For example, in April 2025, Trump's Truth Social post urging investors to “BUY DJT” coincided with a 90-day tariff pause, sparking accusations of market manipulation.

Democratic lawmakers and ethics experts have called for investigations into whether Trump or his allies exploited non-public information for financial gain. The White House defended the post as part of the president's “duty to reassure the markets,” but the timing of the announcement—just hours after the social media post—has fueled skepticism.

The SPAC Legacy: A Fragile Foundation

DJT's 2021 SPAC merger with Digital World Acquisition Corp was a high-profile but contentious process. The deal faced delays and regulatory hurdles, reflecting the SEC's growing wariness of SPACs involving politically exposed sponsors. Post-merger, the company has struggled to justify its valuation, with revenue of just $821,000 in Q1 2025 and a $31.7 million net loss.

The SPAC structure itself is a double-edged sword for PEAs. While it offers a faster path to public markets, it also exposes companies to heightened scrutiny over governance and transparency. DJT's reliance on Trump's political brand has amplified these risks, as regulators and investors increasingly question whether its value is driven by fundamentals or political influence.

Long-Term Viability: A Tenuous Outlook

For politically exposed assets like DJT, long-term viability hinges on three factors: regulatory resilience, governance reforms, and market sentiment.

1. Regulatory Resilience: The SEC's Project Crypto initiative and 2024 rule changes suggest a regulatory environment that will continue to test DJT's compliance. If the company fails to address its internal control weaknesses or faces enforcement actions, its stock could face further declines.
2. Governance Reforms: DJT's recent hiring of accounting staff and third-party consultants is a step toward strengthening controls, but these measures must be sustained. Investors should monitor whether the company can demonstrate consistent financial reporting and reduce its reliance on Trump's political influence.
3. Market Sentiment: DJT's stock price remains highly correlated with Trump's political fortunes. While Truth Social's user base has grown to 359,000 daily active users, it lags far behind platforms like X and Reddit. The company's pivot to cryptocurrencies and ETFs may attract speculative investors, but these moves also expose it to regulatory risks in the volatile crypto sector.

Investment Implications

Investors considering DJT must weigh the potential for political tailwinds against the risks of regulatory and governance headwinds. The stock's volatility—up 22.67% in April 2025 following Trump's tariff announcement but down 56% since his re-election—reflects its precarious position.

For risk-tolerant investors, DJT could offer speculative upside if Trump's policies boost market confidence or if the company successfully executes its crypto-related initiatives. However, the risks are substantial:
- Regulatory Enforcement: A SEC investigation into short-selling or market manipulation could trigger a sell-off.
- Political Controversies: Trump's legal battles and the polarized political climate may deter institutional investors.
- Financial Weaknesses: Persistent losses and low revenue raise questions about the company's ability to sustain operations without further capital infusions.

Conclusion

Trump Media & Technology Group (DJT) is a microcosm of the challenges facing politically exposed assets in the post-SPAC era. While its association with Trump provides a unique narrative, it also exposes the company to regulatory, governance, and political risks that could undermine its long-term viability. For investors, the key takeaway is clear: PEAs require a higher bar of due diligence. In DJT's case, the path to sustainability will depend on its ability to navigate regulatory scrutiny, strengthen governance, and prove that its value is rooted in more than just political influence. Until then, the stock remains a high-risk proposition, best suited for those with a strong stomach for volatility and a willingness to bet on the unpredictable.