Shares of Digital World Acquisition Corp, a special purpose acquisition company (SPAC) that had previously announced plans to merge with the media venture of former U.S. President Donald Trump, experienced a 5% decline in premarket trading on Friday. The drop came in response to the notable return of Donald Trump to a prominent social media platform.
The decline in Digital World Acquisition Corp shares followed the surprising reappearance of Donald Trump on the social media platform X, formerly recognized as Twitter. After a hiatus of over two and a half years, the former president marked his return on Thursday by posting an image of his mugshot from his booking at the Fulton County Jail in Georgia. The post was accompanied by an appeal for donations.
In his online resurgence, Donald Trump signaled his return exclusively to X, in contrast to his prior commitment to using his newly developed platform, Truth Social. This alternative social media app had been crafted by his venture, Trump Media & Technology Group (TMTG), following his suspension from Twitter in the wake of the January 6, 2021, assault on the U.S. Capitol by his supporters. Trump’s Twitter account, which boasted over 88 million followers before the suspension, had become a central communication channel for him during his presidency. His Truth Social account, as of Friday, gathered 6.39 million followers.
The intertwining factors of Donald Trump’s reentry into the social media landscape and the persistent uncertainties surrounding the Digital World Acquisition Corp’s merger with TMTG led to the premarket dip in the company’s shares. The proposed merger, unveiled in October 2021, aimed to inject $1.3 billion in cash into the parent company of Truth Social. However, the transaction encountered months of regulatory scrutiny, forcing Digital World to address fraud allegations with the U.S. Securities and Exchange Commission (SEC) earlier this year. This legal matter resulted in a postponement of the merger’s closure, as the company secured a three-month extension, setting the new deadline for December 31.
Furthermore, on Thursday, Digital World Acquisition Corp received a communication from Nasdaq stating that the company was not in compliance with one of the exchange’s listing regulations. This development added an additional layer of concern for investors.
The collective impact of these events is evident in the 5% drop experienced by Digital World Acquisition Corp’s shares in premarket trading. Investors are closely monitoring the intersection of Trump’s digital presence and the ongoing uncertainty surrounding the merger with TMTG. The intricacies of this situation will likely continue to influence the trajectory of the company’s stock value in the coming weeks.
In conclusion, the resurgence of former President Donald Trump on the social media platform X, combined with the persisting challenges surrounding the Digital World Acquisition Corp’s merger plans, has resulted in a discernible dip in the company’s shares. Investors and market analysts are now navigating this intricate landscape as they assess the potential ramifications on both fronts.
Source: Reuters
