TRUMP STOCK SURGE
SPAC trade frenzy
New York Stock Exchangelisted shares of Digital World Acquisition Corp. — the special purpose acquisition company that announced on Wednesday that it will merge with former President Donald Trump’s new social-media firm — soared more than 460 percent on Thursday.
DWAC’s stock price began trading on Thursday at $12.73 per share and reached as high as $58, up more than 460 percent, by 1:45 p.m. EDT.
Shares were halted for volatility at noon, with the stock up more than 134 percent, and once more at around 1 p.m. The stock was halted again at 1:49 p.m. at $50.17 per share as it rapidly lost gains, but it still ended the day up 383 percent at $49.08 per share.
The surge appeared to be driven by amateur traders as the Reddit crowd that sparked January’s GameStop stock frenzy apparently piled on.
DWAC was the most traded stock on Fidelity’s platform, with well over 30,000 buy orders earlier in the day, outnumbering the sell orders by 3-to-1.
The stock saw more than three times the buy interest Thursday than Tesla, the second-most-bought stock on Fidelity, and over six times the demand for the ProShares Bitcoin Strategy ETF.
DWAC was also the mostmentioned company on the amateur-trading chat room Stocktwits, and it was mentioned widely on Reddit’s WallStreetBets forum.
Trump’s new Trump Media & Technology Group announced Wednesday evening that it plans to merge with DWAC and take its place on the public markets.
TMTG said in a press release that it would roll out a social network, TRUTH Social, set to launch in beta for “invited guests” next month and go nationwide in the first three months of 2022.
The company’s mission is to “create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley,” the press release said.
DWAC is a SPAC, or “blank check” company, an increasingly popular set-up in which a company goes public to raise funds from investors and then purchases a private company, allowing it to take the SPAC’s place on the public markets.
The merger will value TMTG “at an initial enterprise value of $875 million, with a potential additional earnout of $825 million in additional shares (at the valuation they are granted) for a cumulative valuation of up to $1.7 billion depending on the performance of the stock price post-business combination,” the press release said.