Here's how the short-seller betting against the SPAC taking Trump's media firm public sees the former president's gambit playing out

• Short-seller Iceberg Research said Donald Trump's social site could compete with the likes of Twitter.
• But Truth Social would "need a lot of traffic" to absorb the high fixed costs.

A short-seller betting against the SPAC merging with Donald Trump's company said the former US president's social media site might work.

Arnaud Vagner, director of the short-seller Iceberg Research, said Trump's Truth Social platform could compete with the likes of Twitter - but he's unsure of how profitable that would be.

"Everybody knows that the fixed costs of social media are very high," Vagner told Insider in an interview. "So they really need a lot of traffic to absorb. It's not so easy to be Facebook or Twitter."

On Monday, Iceberg Research announced its short position against shares of Digital World Acquisition Corp., a blank-check company that is merging with Trump Media & Technology Group.

The short seller said the former president has leverage to renegotiate for more of the company, considering the shares had an epic rally following the merger announcement.

"The main point is that the higher the stock price is, the most likely Mr. Trump will not leave money on the table," Vagner told Insider.

DWAC stock surged to $157 last week following the announcement, in part, due to retail traders pouring into the stock.

"Everything was really priced very high, and for me, that was when the risk appeared," said Vagner, whose firm has also been vocal about its short position in retail-favorite AMC.

Since hitting triple digits, the stock has pared some of its gains. It closed at $59.07 in New York on Tuesday.

But Vagner said DWAC stock "still has some room to go down." He added that Iceberg Research isn't intending to maintain its short position very long, but declined to elaborate further on a timeline. He did, however, say he wants to "get away" before the company undoubtedly promotes the social media site "very aggressively."

"Of course, if you're a hard-core Republican, a fan of Trump, you will try the service," he said. "But then if you're surrounded by people having the same opinion as you, I'm wondering, do you want to spend time on the social media? I don't know."

Representatives from Trump Media & Technology Group and Digital World Acquisition Corp. did not respond to Insider requests for comment on Iceberg Research's short position.