Musk wants to help Trump? Try an X-Truth tie-up

X in the box. Elon Musk has come out squarely behind Donald Trump in this year’s race for the U.S. presidency. But there’s a way he could be even more helpful to his preferred candidate, and do them both a financial favor too: merge his social media platform X with Trump’s.

Truth Social, whose parent Trump Media and Technology went public by merging with a listed special-purpose acquisition company earlier this year, is trying to build a social media firm from scratch. It has only 9 million users, and less than $1 million in revenue. Merging with X would eliminate a large part of its costs, allowing it to plug into the bigger firm’s content moderation capabilities, security and advertising sales teams.

While it might seem odd for one company to own two rival networks, there’s a precedent for that: online dating group Match already owns competing services Tinder, Match and Hinge. Meanwhile, for Musk, assimilating Truth would turn a rival into an ally. X scored a coup earlier this month when U.S. President Joe Biden used Musk’s network to say he was ending his bid for re-election. If Trump wins the White House contest on Nov. 5, his own platform might get presidential news nuggets first.

Here’s how it could work. X is private, but it could merge into the $6 billion Trump Media’s public stock in what’s often called a reverse takeover – the same kind of small-eats-big deal in which Truth fused with listed SPAC Digital World Acquisition in the first place. That would immediately turn Trump’s 60% stake into a much smaller share of the combined firm. That’s no bad thing for Truth investors, because it will mute the effect if Trump decides to sell shares once his lock-up expires starting in September.

A deal would require both sides to agree a valuation for X. Musk bought it for $44 billion. One investor, Fidelity, has marked its stake down some 75%. But X might benefit from the Trump halo effect: Truth shares currently trade at an astronomical $670 per user. At even one-eighth of that multiple, X would be back to what Musk paid in 2023. He too could start to sell his stake, giving him liquidity for new endeavors in artificial intelligence, or space, or both. Daring as an X-Truth deal tie-up would be, it’s one place where this year’s election could create some unity after all.