The Oklahoman

Stock tied to Trump’s new media venture soars

Experts split on the company’s prospects

- Stan Choe

NEW YORK – The company planning to bring President Donald Trump’s new media venture to the stock market soared further Friday amid another frenzy of trading.

Digital World Acquisitio­n Corp. nearly tripled in the first minute of trading before it was temporaril­y halted. It then gave up a chunk of those gains and was sitting on a 93.3% gain at $88.78, as of noon. Eastern time. In the morning, it climbed as high as $175.

A day before, the stock more than quadrupled to $45.50 from $9.96 after it said it would merge with Trump Media & Technology Group. The new venture, with Trump as its chairman, aims to challenge Facebook, Twitter and even Disney’s streaming video service.

Experts are split on the company’s prospects, and the deal announcing its merger with Digital World Acquisitio­n was unusual in how few details it offered investors. But the surge in its price indicates some investors are betting on it to be popular.

Some investors appear to be believers in Trump’s ideology, while others see a chance for the company to quickly gain a big audience. A big chunk of investors, though, appeared simply to be grabbing a chance for a quick buck.

Several threads on Reddit’s Wall-StreetBets forum, where millions of traders share their successes and failures, had users bragging about how much money they made by jumping in and out of Digital World Acquisitio­n Corp. Others were asking if they should listen to the fear they were feeling of missing out.

Trading in the stock was so furious, and swings in its price were so sharp, that it was temporaril­y halted at least 12 times through the morning.

Digital World Acquisitio­n is a special-purpose acquisitio­n company, something that’s typically called a SPAC or “blank-check” company. It’s sitting on a little less than $300 million of cash that it raised in its own initial public offering, before it went looking for a company to acquire.

SPACs can offer privately held companies a quicker and easier way to get their stocks on an exchange, by merging with them. They were wildly popular earlier this year, but activity had been receding as regulatory scrutiny on them and interest in them dimmed, at least until Wednesday’s Trump-related announceme­nt.

Ít can be difficult for skeptical investors to bet that a SPAC’s price will fall, a move called “shorting,” said Michael Ohlrogge, an assistant professor of law at New York University who has researched SPACs. With few short sellers, that can remove a force pushing a stock’s price down, allowing it to jump even higher than it would otherwise.

“Overall, I think it’s a big difficulty because it leads to their prices being inflated,” Ohlrogge said.

All the action in Digital World Acquisitio­n’s stock is happening before investors have even had a chance to see a proxy statement, which will give details about the merger and possibly about how Trump Media & Technology Group will operate.

The last time Trump ran a publicly traded company, it didn’t end up well for investors. His casino company, Trump Entertainm­ent Resorts, lost hundreds of millions of dollars over more than a dozen years and filed for bankruptcy several times, socking shareholde­rs with big losses. Trump fared better. He took in $82 million in fees, salary and bonuses over the same period, according to Fortune magazine.

 ?? AFP VIA GETTY IMAGES ?? This illustrati­on file photo taken on Oct. 20 shows a person checking the app store on a smartphone for “Truth Social,” with a photo of former US President Donald Trump on a computer screen in the background, in Los Angeles.
AFP VIA GETTY IMAGES This illustrati­on file photo taken on Oct. 20 shows a person checking the app store on a smartphone for “Truth Social,” with a photo of former US President Donald Trump on a computer screen in the background, in Los Angeles.

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