Digital World Acquisition Corp. (DWAC) shares spiked after early losses Tuesday, as shareholders of the special acquisition firm approved a one-year extension of the deadline to take former President Donald Trump’s social media platform public.
At a shareholder meeting held Tuesday at noon, DWAC informed investors that more than the 65% needed to approve the question had voted to extend the deadline.
Investors’ decision to approve the extension comes after Trump announced his candidacy for president in 2024.
DWAC shares rose 9% higher on Tuesday after falling 1.3% during earlier market trading. On Monday, the stock reversed the losses and rose higher on the close after Elon Musk restored Trump’s Twitter account on Sunday.
DWAC Shareholder Meeting
In early November, DWAC stock skyrocketed after the SPAC postponed a shareholder vote — for the sixth time — on whether to approve a one-year extension to complete the merger with Trump Media and Technology Group. Trump Media is the parent company of the conservative social media platform Truth Social.
The shareholders’ meeting was adjourned to Tuesday, November 22, where the SPAC finally announced that shareholders had voted to extend the deadline to September 8, 2023.
DWAC’s deadline to complete the merger with Trump’s company was originally set for early September 2022. However, the SPAC has claimed that a Securities and Exchange Commission investigation into the deal has delayed proceedings.
Because DWAC shareholders failed to vote in September, the SPAC’s sponsor, ARC Global Investments, contributed about $2.9 million to extend the merger deadline to Dec. 8, according to federal documents.
DWAC had warned investors that if the one-year extension was not granted, the company could potentially cease operations and liquidate shares.
In an SEC filing, DWAC revealed that from Sept. 19 to Sept. 23 it had received termination notices from private investors in public stock (PIPE) amounting to approximately $139 million. In its Aug. 23 quarterly report, it reported that it had lost $6.2 million in the first half of the year. And according to the most recent filing, it continues to lose millions of dollars.
DWAC Stock and the Trump brand
DWAC is a special-purpose acquisition firm that is seeking to take the former president’s technology and social media platform public in the kind of reverse merger that was popular several years ago. The company reported last week that money continues to bleed. The SPAC said it lost about $3.4 million in the most recent quarter ending Sept. 30, according to SEC filings. On Tuesday, the group confirmed it has lost more than $10 million so far in 2022, according to federal records.
The future of DWAC and its efforts to take Trump Media and Technology Group public is closely tied to the value of the Trump brand. Another presidential bid is seen as a big boost for the brand.
DWAC shares fell last week after Trump officially announced he will again seek the Republican nomination as a presidential candidate in 2024. This was a reversal after DWAC shares rose about 70% in early November following news that Trump’s presidential bid was imminent. DWAC stock is currently up about 50% in November.
DWAC shares also plummeted after the midterm elections as Republicans fell far short of expectations. The performance was read by some as a rejection of Trump-backed candidates. Given the doubts raised by interim results, another presidential run is the clearest short-term path to bolstering the appeal of the Trump brand.
The affair between Musk and Trump
On fridaynight, Tesla (TSLA) CEO Elon Musk, who took over Twitter on Oct. 28, posted a poll from his account asking the public whether Trump’s account should be reinstated. Twenty-four hours later, Musk tweeted that “the people have spoken. Trump will be reinstated.”
The Twitter poll turned out to have more than 15 million responses, with 51.8% of the vote favoring Trump’s return to Twitter.
However, Trump has said he will not be returning to Twitter.
“I don’t see any reason for it. They have a lot of trouble on Twitter. You see what’s going on. It can make it, it can’t make it,” Trump said at the Republican Jewish Coalition’s annual leadership meeting on Saturday . .
Trump also indicated on Truth Social that he would stick with his social media platform and not start tweeting.
“Now vote with positivity, but don’t worry, we’re not going anywhere. Truth Social is special!” Trump wrote on Saturday, citing Musk’s Twitter poll.
Musk apparently responded on Twitter on Sunday, posting an image of a woman representing Twitter and a priest representing Trump.
“And do not lead us into temptation,” the billionaire wrote.
DWAC share with Musk in charge of Twitter
The recent volatility in DWAC stock comes from Musk taking control of Twitter, changing the way the social media platform is run.
Musk has cut about half of the social media site’s staff while regularly tweeting about his plans and politics. Musk has also personally responded to customer complaints and suggestions. There is a lot of confusion about the rollout of verification features and speculation that the company could go out of business.
On Friday, Musk tweeted “the new Twitter policy is freedom of speech, but not freedom of reach.”
Musk said that “negative/hate tweets” would be demonetized and that other users would not be able to find the tweet unless they specifically searched for it. Musk added that this only applies to tweets and not accounts.
Musk’s focus on Twitter is hurting Tesla stock, according to some analysts. Tesla shares have held about 20% since Musk acquired Twitter on Oct. 28. On Tuesday, Tesla shares rose 0.6% after falling 6.8% on Monday.
Musk also sold 19.5 million Tesla shares for $3.95 billion on November 4, 7, and 8. The decision to sell some of his Tesla stock came just days after Musk completed his $44 billion purchase of Twitter.
Last week, Musk testified in a Delaware court to defend himself in a shareholder lawsuit.
While testifying, Musk said he expects to “reduce my time at Twitter and find someone else to run Twitter over time,” according to news reports.
DWAC stock well off of highs
Truth Social was launched after Twitter shut down Trump’s account following the January 6 riot at the US Capitol. Some industry observers argue that a return to Twitter could redirect much of Truth Social’s audience to the more mainstream channel.
DWAC stock is down about 87% from its October 22, 2021, high of 175, just after news of the merger deal with Trump broke.
Follow Kit Norton on Twitter @KitNorton for more coverage.
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