The stock price of SPAC company Digital World Acquisition Corp. rocketed up more than 90% in extremely heavy trading volume Thursday morning after news of a merger that would launch former President Donald Trump‘s planned social media platform.
Digital World Acquisition was the single most actively traded stock on the Fidelity platform Thursday, and was by far the most traded stock on the consolidated tape of New York Stock Exchange and Nasdaq listings.
Buy orders for DWAC — a so-called special purpose acquisition company set up to raise capital in the public markets to purchase private firms — outnumbered sell orders by nearly three-to-one.
In a press release Wednesday night, Trump’s new company Trump Media & Technology Group said it and DWAC “have entered into a definitive merger agreement, providing for a business combination that will result in Trump Media & Technology Group becoming a publicly listed company, subject to regulatory and stockholder approval.”
Trump also said he would roll out the platform called “TRUTH Social,” which he claimed will “stand up to the tyranny of Big Tech.”
Trump has been banned by the social media giants Twitter and Facebook since early this year after he was accused of inciting the Jan. 6 Capitol riot by a mob of his supporters.
Before the ban, Trump had been a compulsive user of Twitter, often sending out multiple tweets per day during his presidency. Since the ban, Trump has struggled to get his off-the-cuff brickbats against political foes heard in mass media.
In the press release Wednesday night, the ex-president’s new company said its “mission is to create a rival to the liberal media consortium and fight back against the “Big Tech” companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America.”
Digital World Acquisition was incorporated in late 2020, shortly after Trump lost a re-election bid against President Joe Biden.
DWAC opened trading Thursday at $12.73 per share. By 10:42 am. ET, the share price had risen to nearly $18 per share.
The ticker DWAC was among the top 10 most popular names on Reddit’s WallStreetBets chatroom Thursday, even exceeding meme stock GameStop’s mentions, according to alternative research provider Quiver Quantitative.
That could be a sign that retail investors active on social media platforms were fueling the rally in the SPAC.
The Securities and Exchange Commission did not immediately respond to a request for comment.
The planned merger values Trump Media & Technology Group “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 Wednesday said.
“Trump Media & Technology Group’s growth plans initially will be funded by DWAC’s cash in trust of $293 Million (assuming no redemptions),” according to the release.
A corporate overview of Trump’s new company does not list any officers, employees, or operations.
Instead, the 22-page slide show contains several graphics showing how many followers Trump had on Twitter before he was banned, and suggestions that the new venture will compete with both Disney+ and Netflix.
Patrick Orlando, CEO of DWAC, said in the press release that, “Digital World was formed to create public shareholder value and we believe that TMTG is one of the most promising business combination partners to fulfill that purpose.”
“Given the total addressable market and President Trump’s large following, we believe the TMTG opportunity has the potential to create significant shareholder value,” Orlando said.
The release also said that “TMTG intends to launch a subscription video on demand service” called TMTG+.
“TMTG+ will feature ‘non-woke’ entertainment programming, news, podcasts, and more,” the release said.
This is breaking news. Please check back for updates.
