DWAC stock falls after Trump picks Fizzle in midterms

Digital World Acquisition Corp. ( DWAC ) stock fell early Wednesday as the special-purpose buyout firm took a hit after Tuesday’s midterm elections were interpreted by some as a repudiation of candidates backed by former President Donald Trump.


With several key races still undecided, Republicans appeared poised to gain a slim majority in the US House of Representatives. But the election results have fallen well short of GOP expectations for a “red wave” that would bring majorities in both houses of Congress. With several Trump-backed candidates underperforming, several Republican political observers have speculated that voters have cornered the former president.

DWAC aims to take the former president’s tech and social media platform public in the kind of reverse merger that was popular several years ago. DWAC stock fell 19.7% in trading on Wednesday. Stocks jumped nearly 70% on Monday on news that Trump will announce another run for the White House this month.

At a rally Tuesday night in Ohio, Trump said he would make a “very big announcement” next week.

“I’m going to make a very big announcement on Tuesday, November 15,” Trump said before the election results began to come in.

DWAC Stock And The Trump Brand

The future of DWAC and its efforts to publicize the Trump Media and Technology Group is closely tied to the value of the Trump brand. Trump Media is the parent of the conservative social media platform Truth Social.

The victories of Trump-endorsed Senate candidates JD Vance in Ohio and Ted Budd in North Carolina were positively Trump-brand. But a long list of losses raises questions about Trump’s waning power, with Mehmet Oz losing his Senate bid in Pennsylvania and Trump protégé Cary Lake trailing late in the still-undecided governor’s race Arizona.

Given the doubts raised by the midterm results, another presidential election is the clearest short-term path to boosting Trump’s brand appeal.

DWAC shares soared late last week after the SPAC delayed a shareholder vote — for the sixth time — on whether to approve a one-year extension to complete its merger with Trump Media.

The shareholders’ meeting is now set for November 22. DWAC’s deadline to complete its merger with Trump’s company was originally set for early September. However, the SPAC claimed that a Securities and Exchange Commission investigation into the deal delayed the process.

Financial hardship DWAC

With DWAC shareholders failing to complete a vote in September, the SPAC’s sponsor, ARC Global Investments, contributed about $2.9 million to extend the merger deadline to Dec. 8, according to federal filings. The vote organized by DWAC management gives shareholders the opportunity to extend the deadline until September 8, 2023.

Now that DWAC has funding, the SPAC has until Dec. 8 to muster the votes to approve the extension.

DWAC has warned investors that if the annual extension is not granted, the company could potentially cease operations and liquidate shares.

Federal filings also show the SPAC is hemorrhaging cash. In an SEC filing, DWAC disclosed that between September 19 and September 23 it had received termination notices from private investments in public equity (PIPEs) representing approximately $139 million.

This comes after DWAC reported in its quarterly report on August 23 that it had lost $6.2 million in the first half of the year.

Stock DWAC with Musk Head of Twitter

DWAC stock performance this week comes as Tesla (TSLA) chief Elon Musk is now officially the head of Twitter.

Musk began climbing the social media platform with mass layoffs, cutting about 50% of the company’s workforce. It also offered a $7.99 monthly fee that includes blue check verification and other social media perks.

Musk sold 19.5 million Tesla shares for $3.95 billion on Nov. 4, 7 and 8, according to SEC filings late Tuesday. The decision to sell some of his Tesla stock comes days after Musk finalized his $44 billion purchase of Twitter.

US economy has a sinking feeling: IBD/TIPP Poll

Musk is signaling that people banned from the social media platform, including Trump, may be reinstated. This could be a death blow for Truth Social, but Trump has said he plans to stick with his platform.

“I live in the Truth,” Trump told Fox News Digital in late October.

“I like Elon, but I live in Truth,” he added.

DWAC Stock Well Off High

Truth Social started when Twitter shut down Trump’s account after the January 6 riot at the US Capitol. Some industry observers argue that a return to Twitter could redirect a large portion of Truth Social’s audience to the more mainstream channel.

DWAC stock is down 90% from its Oct. 22, 2021, high of 175, which was made shortly after news of the Trump merger deal first broke.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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