DWAC Stock Sinks On Midterm Results, Trump ‘Big Announcement’ To Come
Digital World Acquisition Corp. (DWAC) stock dived early Wednesday as the special purpose acquisition company took a hit after Tuesday’s midterms elections were read by some as a repudiation of candidates backed by former President Donald Trump.
With several important races still undecided, Republicans appeared poised to land a narrow majority in the U.S. House of Representatives. However, the election results have fallen well below GOP expectations of a “red wave” bringing majorities to both chambers in Congress. With a number of Trump-endorsed candidates underperforming, several Republican political observers have hypothesized that voters have soured on the former president.
DWAC aims to take the former president’s tech and social-media platform public in the sort of reverse merger that was popular several years ago. DWAC stock sank 19% early during early market trading Wednesday. Shares shot up almost 70% Monday on news Trump will announce another run for the White House this month.
At a rally Tuesday night in Ohio, Trump said he would be making a “very big announcement” next week.
“I’m going to be making a very big announcement on Tuesday, Nov. 15,” Trump said before election results started coming in.
DWAC Stock And The Trump Brand
The future of DWAC and its efforts to take Trump Media and Technology Group public are tightly bound up in the value of the Trump brand. Trump Media is the parent of the conservative social-media platform Truth Social.
Wins by Trump-backed Senate candidates J.D. Vance in Ohio and Ted Budd in North Carolina were positives from the Trump brand. But a long list of losses raises questions about Trump’s fading wattage, with Mehmet Oz losing his Senate bid in Pennsylvania, and Trump protege Kari Lake trailing late in Arizona’s still-undecided governor’s race.
Given the doubts raised by midterm results, another presidential run is the clearest short-term path to bolstering Trump’s brand appeal.
DWAC shares shot up late last week after the SPAC delayed a shareholder vote — for the sixth time — on whether to approve a year extension to complete its merger with Trump Media.
The shareholders meeting is now set for Nov. 22. DWAC’s deadline to complete its merger with Trump’s company had originally been in early September. However, the SPAC has claimed a Securities and Exchange Commission investigation of the deal delayed the proceedings.
DWAC Financial Difficulty
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 until Dec. 8, according to federal filings. The vote arranged by DWAC management provides shareholders an opportunity to extend the deadline until Sept. 8, 2023.
Now that DWAC has funding, the SPAC has until Dec. 8 to get the votes to approve the extension.
DWAC has warned investors that if the yearlong extension was not granted, the company could potentially cease operations and liquidate shares.
Federal filings also show the SPAC is hemorrhaging cash. In an SEC document, DWAC revealed that between Sept. 19 and Sept. 23 it had received termination notices from private investment in public equity (PIPE) investors representing around $139 million.
This comes after DWAC reported in its quarterly report on Aug. 23 that it had lost $6.2 million in the first half of the year.
DWAC Stock With Musk In Charge Of Twitter
DWAC stock performance this week comes as Tesla (TSLA) chief Elon Musk is now officially in charge of Twitter.
Musk began heading up the social media platform with mass layoffs, cutting around 50% of the company’s work force. He also rolled out a $7.99 monthly fee which 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 just days after Musk finalized his $44 billion purchase of Twitter.
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Musk has been signaling that people who have been banned from the social media platform, including Trump, may be reinstated. This could be a deathblow to Truth Social, but Trump has said he plans to remain on his platform.
“I am staying on Truth. I like it better, I like the way it works. I like Elon, but I’m staying on Truth,” Trump told Fox News Digital in late October.
DWAC Stock Well Off Off Highs
Truth Social launched after Twitter shut down Trump’s account following the Jan. 6 riot at the U.S. Capitol. Some industry observers contend 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, marked just after news of the Trump merger deal first broke.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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