This article appeared on Forbes.com
Running for president usually doesn’t help billionaires get richer. Think of Michael Bloomberg, who spent $1.1 billion in 2020. Or Tom Steyer, who spent $342 million. OR Donald Trumpwhich shelled out $66 million in 2016 and then managed to piss off its lenders and business partners by refusing to admit it lost in 2020.
Times have changed. The former president, who announced his re-nomination for 2024 on Tuesday evening, has organized her activity by enabling her to profit from her supporters and isolating her from potential opponents.
Profit through social media
The change began with the creation of the Trump Media and Technology Group, the parent company of imitation Twitter, TruthSocial. Trump launched the application in May. Four months later, Forbes valued the tycoon’s stake in the firm at $730 million. It’s the largest asset in the former president’s $3.2 billion empire and could be worth even more if he uses it in the 2024 presidential race.
Controversy can take a toll on many businesses, but social media platforms thrive on it. They don’t have to worry about turning away guests (unlike hotels) or angering members (unlike golf clubs) or damaging their brands (unlike licensing companies). For these companies, conflict brings attention, which draws users, which draws advertisers. Elon Musk, the new owner of Twitter, understands this dynamic well. “I hope they keep cursing me on Twitter, because it increases ad revenue!”,
on its platform.
I hope they keep cursing me on Twitter, as it increases advertising revenue!— Elon Musk (@elonmusk) November 13, 2022
The advantages of reapplying
There are already signs that Trump is benefiting from his decision to run. Two months ago Forbes estimated the value of Trump’s stake in the parent company in $10 per sharebased on the price a handful of large investors have agreed to pay to participate.
Private investors, however, believe it is worth much more. After rumors of a campaign flared earlier this month, shares of a SPAC that is planning to merge with Trump’s company jumped 66%, from $17.48 to $29.10. before settling at the current 25.37. Investors believe the former president’s stake is worth $2.5 billion, $1 billion more than they thought it was worth 12 days ago.
Trump has also taken steps to protect his business from the negative consequences of litigation. In May he sold his hotel at a loss in Washington DC for 375 Millions of dollars. This was a remarkable deal, not only because it brought in huge revenue, but also because it allowed the billionaire to divest from his core consumer-facing business, making him less vulnerable to the repercussions.CopyAMP code.
Today Trump no longer has to worry about banks as in the past. At one time critics wondered who would ever give him a loan. Then the real estate mogul restructured nearly a billion dollars in debt, paying off some loans and refinancing others. Among his new creditors, the most important of which is the Axos bank, they know they are dealing with a divisive figure. At this point, they won’t let negative headlines scare them.
Donald Trump’s new strategy
The damage to Trump’s brand has probably already been done. Several licensing partners including Macy’s And Serta, balked during the 2016 election campaign. His name was taken off buildings whose developers had paid to use it. The Trumps now appear to be limited to dealing with companies that don’t care about disputes, such as the Saudi real estate company that reportedly just signed a new licensing deal with the family. Such deals could raise fears of corruption, but are unlikely to inflict further damage on the tycoon’s business.
This time, Trump will no longer have to go the route most billionaires take to office, which is to spend a lot of money to get attention. After boasting that he relied on his own wealth rather than outside donors, he gradually persuaded his followers to hand over money to him.
After losing the 2020 election, one of its committees managed to raise more than 100 million dollars. In 2024, Donald Trump could finally fulfill a prophecy he uttered 22 years ago. “It’s very likely,” he said to Fortunes in 2000, “may I be the first presidential candidate to run and make money.”
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