Trump SPAC DWAC drops in price after big gains on social media news
Trump Media and Technology Group will develop the social media app.
Rafael Henrique | LightRocket | Getty Images
After registering huge gains last week, the SPAC stock that is linked to Donald Trump’s social media platform began falling in value Monday afternoon. following news that it would merge with the ex-president’s planned social media company.
Digital World Acquisition Corp.The stock price was slightly higher Monday morning, with trading at about 4% more than the day prior before slipping back to hover around the “unchanged”, which is $94 per share.
The price dropped 10% shortly after 2:05 p.m. ET
That pace was a major change from last week, when DWAC shares skyrocketed from $9.96 apiece at Wednesday’s close to $94.20 per share Friday — a whopping 845% rally in two days.
Trading volume was significantly lower at the special purpose acquisitions company.
According to FactSet, over 55 million shares had been sold as of Monday afternoon.
This price was set last Thursday soared more than 350% in a single session, nearly 500 million shares of DWAC were traded.DWAC at that time was the most traded on the consolidated tape from the New York Stock Exchange listing and Nasdaq Listings.
The share price at the software startup that makes advertising software is another indication of Trump’s popularity. PhunwareOn Monday, the drop was 20%
Phunware saw a 4720% price increase on Friday.
Phunware is not believed to be in a business partnership with DWAC. However, Phunware’s increase last week coincided perfectly with an increase in SPAC stock.
Despite not seeing any fireworks Monday trading, DWAC remained a hot topic with retail traders. They were credited for turning SPAC into the hottest “meme stock” in 2021.
According to Quiver Quantitative, the DWAC ticker was second in Reddit’s WallStretBets chatroom, just behind Tesla, an electric vehicle company that reached a $1 trillion market cap on Monday.
WallStreetBets Monday Trending Post: “DWAC – ALL IN” Attracted more than 500 Comments
SPACs (also known as blank check companies) are designed to raise capital from the public equity markets. They can use the money to buy or merge private businesses.
Trump’s new social media company, Trump Media & Technology Group, on Wednesday said it and DWAC had reached an agreement to merge so that the former president’s firm will become a publicly listed company.
Trump said his yet-to-be-launched “TRUTH Social,”Platform will “stand up against the Tyranny of Big Tech”.
Trump’s promise to launch a competitor to the social media giants was months late before last week’s announcement. Twitter FacebookBoth of these ban him from for inciting the Jan. 6 Capitol riot by his supporters.
Trump’s controversial status is not lost on hedge funds, which would have benefited by the sharp increase in DWAC’s stock price.
Last week, at least two hedge funds that were among DWAC’s biggest investors — Lighthouse Investment Partners and Saba Capital Management — dumped shares in the SPAC after learning of plans to merge with Trump’s company.
Investors are asking difficult questions on how to integrate their values into work. “This was not an easy call for us.” Saba Capital founder Boaz Weinstein wrote in an email statement cited by Bloomberg.