DWAC Stock Tumbles After Trump Picks Fizzle In Midterms

Digital World Acquisition Corporation (DWAC) shares fell early Wednesday as the special-purpose acquisition company took a hit after Tuesday’s midterm elections were interpreted by some as rejecting a candidate backed by former President Donald Trump.


With several important races still undecided, Republicans appear poised for a narrow majority in the U.S. House of Representatives. The election results, however, fell well short of Republican expectations for a “red wave” to bring majorities to both houses of Congress. With some Trump-backed candidates underperforming, some Republican political observers assumed voters were disgusted by the former president.

DWAC’s goal is to take the former president’s tech and social media platform public in a reverse merger that was popular a few years ago. DWAC stock fell 19% in market trading on Wednesday. Shares surged nearly 70% on Monday on news that Trump would announce another White House run this month.

At a rally in Ohio on Tuesday night, Trump said he would make a “very big announcement” next week.

“I’m going to make a very important announcement on Tuesday, November 15,” Trump said before the election results began.

DWAC Stock and the Trump Brand

The future of DWAC and its efforts to bring the Trump media and technology conglomerate public is tied to the values ​​of the Trump brand. Trump Media is the parent company of conservative social media platform Truth Social.

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The victories of Trump-backed Senate candidate JD Vance in Ohio and Ted Budd in North Carolina were positives for the Trump brand. But a long list of losses has raised questions about Trump’s fading wattage, with Mohamed Oz losing his Senate race in Pennsylvania and Trump protégé Cary Lake in Arizona’s undecided governor lagging behind in the election.

Given the doubts raised by the interim results, running for president again is the clearest short-term way to increase the appeal of Trump’s brand.

DWAC shares surged late last week after the SPAC delayed a shareholder vote for the sixth time on whether to approve a one-year extension to complete its merger with Trump Media.

The shareholder meeting is now scheduled for November 22. The deadline for DWAC to complete the merger with Trump was originally set for early September. However, the SPAC alleges that the SEC investigation of the deal has delayed proceedings.

DWAC Financial Difficulty

As DWAC shareholders failed to complete a vote in September, SPAC sponsor ARC Global Investments contributed about $2.9 million to extend the merger deadline to Dec. 8, according to federal filings. A vote scheduled by DWAC management offers shareholders the opportunity to extend the deadline to September 8, 2023.

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Now that DWAC has funding, the SPAC has until Dec. 8 to get a vote to approve the extension.

DWAC has warned investors that if the one-year extension is not granted, the company could cease operations and liquidate shares.

Federal filings also show that SPACs are bleeding cash. In a SEC filing, DWAC revealed that between Sept. 19 and Sept. 23, it received termination notices from private equity investment (PIPE) investors in the amount of approximately $139 million.

Previously, DWAC reported in its Aug. 23 quarterly report that it lost $6.2 million in the first half of the year.

Musk takes charge of Twitter’s DWAC stock

DWAC’s stock performance this week is Tesla (TSLA) CEO Elon Musk is now officially in charge of Twitter.

Musk began to lead the social media platform through massive layoffs, slashing about 50% of the company’s workforce. He also introduced a $7.99 monthly fee that includes blue check verification and other social media perks.

Musk sold 19.5 million Tesla shares on Nov. 4, 7 and 8 for $3.95 billion, according to an SEC filing late Tuesday. Just days after Musk completed his $44 billion acquisition of Twitter, he decided to sell some of his Tesla stock.

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Musk has been suggesting that people banned from social media platforms, including Trump, could be reinstated. It could be a fatal blow to Truth Social, but Trump said he plans to stay on his platform.

“I stand by the truth,” Trump told Fox News Digital in late October.

“I like Elon, but I stand by the truth,” he added.

DWAC stock far from highs

Truth Social launched after Twitter shut down Trump’s account following the Jan. 6 riots at the U.S. Capitol. Some industry observers believe that a return to Twitter could redirect a large portion of Truth Social’s audience to more mainstream channels.

DWAC stock is down 90% from its Oct. 22, 2021 high of 175, after news of the Trump merger first broke.

Follow Kit Norton on Twitter @KitNorton for more coverage.

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