Why the Trump SPAC stock DWAC jumped up today
The blank-check company’s stock surged as much as 61% after former President Trump’s new social media app Truth Social launched. Expect further volatility as the SPAC deal rolls on.
Shares of Digital World Acquisition Corp (DWAC), the blank-check company that plans to take Trump Media and Technology Group (TMTG) public some time this year, surged as much as 61% in pre-market trading early Tuesday morning after former President Donald Trump’s new social media app Truth Social launched over the weekend.
Shares climbed nearly $52 to $136 in pre-market trading Tuesday, returning to a level not seen since October 2021, when the merger was first announced.
The stock quickly gave up most of those gains after the market opened Tuesday. But shares of DWAC were trading at $90.79 at the time of this writing, about a 10% gain.
Why DWAC’s share price is up
Former President Donald Trump’s new social media app Truth Social launched Sunday, driving shares of DWAC higher Tuesday. US stock markets were closed Monday in observance of Presidents’ Day.
Two weeks ago, shares of DWAC plunged 18% on news that the app could be delayed until at least March. This came after the app missed its projected November beta launch deadline.
The app launched with limited availability Sunday and is currently the top free app in the US on Apple’s App Store, above HBO Max, TikTok, YouTube, Instagram, Facebook and Snapchat. It’s not yet available on Android.
I signed up for the app Tuesday afternoon and, due to high demand, was placed on a waitlist. I’m number 436,563.
The app gives no indication of when it will be available once on the waitlist, only that it will send out a push notification and email once it’s ready.
According to Trump, the app was developed to provide an alternative to existing social media platforms like Twitter (TWTR) and Meta Platforms (FB). Both platforms banned Trump following the attack on the US Capitol on January 6 last year.
Former President Trump said in October that he “created TRUTH Social and TMTG to stand up to the tyranny of Big Tech” and “to give a voice to all.”
In December, the company announced that then-Congressman Devin G. Nunes would be taking the helm of TMTG as CEO. It also entered into a partnership with online video platform Rumble to provide Truth Social with video and streaming services.
Thinking of buying DWAC stock?
TMTG said in December it has lined up $1 billion in promised investments for the new venture. In a presentation used to pitch investors and analysts, the company projects its Truth Social app to have 81 million users by 2026. According to the filing, Trump Media is forecast to generate nearly $3.7 billion in revenue.
The merger between DWAC and TMTG is expected to happen sometime in 2022, pending regulatory approval and a positive outcome of the ongoing probe by financial securities regulators.
A December filing with the Securities and Exchange Commission (SEC) showed that DWAC was under investigation by the SEC and the Financial Industry Regulatory Authority (FINRA). The regulatory bodies are looking into trading activity that preceded the public announcement of the merger and communications between DWAC and TMTG. What comes of these investigations remains to be seen, but investors should know they could lead to delayed timelines and a possible collapse in the deal.
In any case, investors should expect further volatility. The price of DWAC will likely jump or tumble depending on the outcome of the investigations and whether the SEC approves the deal.
At the time of publication, Matt Miczulski did not own shares of any equity mentioned in this story.
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