Trump SPAC stock falls 18% on launch delay
Digital World Acquisition investors see more volatility on buzz that a promised social media app scheduled to launch this month may not surface until late March.
Shares of the blank-check company partnered with former President Donald Trump’s social media company have tumbled this week on word the app’s launch has been delayed.
The company, Digital World Acquisition Corp (DWAC), which is merging with Trump Media and Technology Group (TMTG), was trading at about $83 Tuesday afternoon, off a Monday high of $97.15.
It’s only the latest delay impacting the Trump startup, as the launch of his TruthSocial website was previously delayed from last November. And it’s just one more step in a volatile ride for investors in what will eventually be a Trump IPO.
For details on the SPAC deal, see our dedicated page.
The buzz on Twitter
Former Rep. Devin Nunes, the recently appointed CEO of Trump Media and Technology Group, said during an exclusive interview on Fox Business on January 23 that the app would be released by the end of the first quarter, which ends March 31.
Nunes said the company was facing challenges with building out the app’s infrastructure and vetting possible partners.
But shares started dropping in the last hour of the trading day Monday as talk of delays in the app’s launch circulated on Twitter.
DWAC’s wild ride
DWAC is a blank-check company, also known as a special purpose acquisition company (SPAC). These are publicly traded shell companies that are formed solely to purchase or merge with another company to take them public.
The company struck a deal in October to bring TMTG public through a merger. Through the deal, TMTG would be valued at up to $1.7 billion. In the days following the announcement, shares of DWAC skyrocketed 846% to a high of $94.20.
Trump’s new company also announced it would be launching a new social media app called Truth Social.
Shares of DWAC sank over the next two months until early January, when Truth Social indicated on the Apple App Store that it would launch on February 21.
DWAC is under investigation already
Soon after the merger announcement, regulators began asking questions about the deal.
In December, DWAC revealed that it was under investigation by both the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).
As a part of the probe, securities regulators had inquired about trading activity and communications between DWAC and TMTG. The investigation spurred from a letter written by Sen. Elizabeth Warren to SEC Chair Gary Gensler asking the agency to investigate the proposed merger and possible securities violations.
Now what?
The app is still listed on the Apple App Store as having an expected launch date of February 21, but, according to Nunes, it could be delayed until the end of March.
Investors still cannot purchase shares of Trump’s company directly. As of now, the exact date of the SPAC merger hasn’t been announced, but it’s expected to happen sometime this year.
In the meantime, investors can buy shares of DWAC ahead of the merger.
At the time of publication, Matt Miczulski did not own shares of any equity mentioned in this story.
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