Trump SPAC DWAC drops in price after big social media gains
The social media app will be developed by Trump Media and Technology Group (TMTG).
Rafael Henrique | LightRocket | Getty Images
PSPC action linked to Donald Trump’s planned social media platform fell sharply on Monday afternoon after posting huge gains last week following news of its merger with the social media company planned by the ex-president.
The shares of Digital World Acquisition Corp. fell 10% just after 2 p.m. ET, trading below $ 83 a share.
Earlier today, DWAC was trading at around 4% higher before retreating to swing either side of the “unchanged” level at around $ 94 per share.
That pace was a major change from last week, when DWAC shares soared $ 9.96 each to nearly $ 94.20 per share on Friday – a huge rally of 845% in two days.
The so-called special-purpose acquisition company also recorded significantly lower trading volume on Monday.
By the afternoon, more than 55 million shares of DWAC had changed hands, according to FactSet.
Last Thursday, as its price climbed more than 350% in a single session, nearly 500 million shares of DWAC were traded. DWAC that day was by far the most traded name on the consolidated strip of New York Stock Exchange and Nasdaq listings.
In another sign that the Trump-fueled craze had subsided, or at least moderate, adware startup Phunware’s share price fell 20% on Monday.
Phunware, who took part in Trump’s 2020 re-election campaign, saw prices rise 470% on Friday.
There is no indication that DWAC and Phunware have a commercial relationship. But Phunware’s rise last week coincided with the peak in PSPC action.
Short seller Iceberg Research unveiled a bearish position on DWAC on Monday, saying investors face uncertainties in the blank check deal as Trump could become a dominant shareholder after the merger.
“Now that the initial excitement has passed, we only see risks for investors for the foreseeable future. Based on Trump’s track record, at the current price, renegotiation is likely to keep more of the merged company. for him, “Iceberg Research said in a tweet.
“The PSPC holders don’t own any part of this project yet. Trump is leveraging, they don’t.”
DWAC has remained a popular talking point among retail traders, who were credited last week with turning SPAC into the latest hot “meme” stock in 2021.
The DWAC ticker was the second most popular name on Reddit’s WallStreetBets chat room on Monday, after Tesla, the electric vehicle giant which reached a market cap of $ 1,000 billion on the same day, according to the alternative data provider. Quiver Quantitative.
A trending article on WallStreetBets on Monday declared “DWAC-ALL IN,” which drew more than 500 comments.
SPACs, also known as blank check companies, are created to raise capital in public stock markets, with the aim of using the cash to buy or merge with private companies.
Trump’s new social media company, Trump Media & Technology Group, announced it on Wednesday and the DWAC has entered into a merger deal to have the former president’s company become a publicly traded company.