Digital World Acquisition Corp. (DWAC), the special purpose acquisition company planning to merge with former President Donald Trump’s Truth Social platform, has seen its shares nearly triple following Trump’s significant lead in the GOP nomination race.
DWAC’s stock price soared as Trump’s position as the Republican nominee for the 2024 elections strengthened, particularly after key rivals withdrew their candidacies and endorsed him.
Rapid Stock Growth Post-Iowa Caucus
DWAC’s share price experienced a remarkable increase from about $17 in early January to nearly $50 by mid-January.
This surge coincided with Trump’s victory in the Iowa caucus on January 15 and the subsequent withdrawal of GOP candidates Vivek Ramaswamy, Florida Gov. Ron DeSantis, and Sen. Tim Scott (R-S.C.), all of whom endorsed Trump.
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Market Reactions and Analyst Perspectives
Kristi Marvin, a former investment banker and founder of SPACInsider which collects data on the SPAC market, told The New York Times, “Now that Trump appears to be the de facto Republican candidate, that momentum is naturally going to carry over.”
Julian Klymochko, CEO of Accelerate Financial Technologies Inc., said to Bloomberg,
“The market has gone full bonkers.” He added, “Shares do not reflect any fundamental intrinsic value of Truth Social, but they are more of a ‘trading sardine,’ or tool of speculation.”
Growth in Other Trump-Linked Companies
Other companies associated with Trump have also experienced significant stock growth. Rumble, a video-sharing platform popular among conservatives, saw its shares double, while Phunware, a software developer hired by Trump’s 2020 campaign, witnessed a substantial increase in its share price.
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Status of the Merger and Financial Concerns
DWAC, founded in 2020, announced its intention to merge with TMTG in October 2021 to create the Truth Social platform.
Despite launching Truth Social in 2022, the merger has faced regulatory hurdles and is yet to be completed.
DWAC’s recent filing with the U.S. Securities and Exchange Commission (SEC) highlighted liquidity concerns regarding TMTG, with the merger being crucial for TMTG’s financial stability.
Future Outlook for DWAC and TMTG
The merger, once completed, will provide TMTG with significant capital, helping it to pay off its debts and continue operations.
DWAC shareholders have voted to extend the merger deadline to September 8, 2024, and both companies are awaiting the SEC’s review of their latest merger agreement.
The success of this merger is seen as pivotal for the future of Truth Social and its parent company TMTG.
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