Shares of Digital World Acquisition Corporation (DWAC) continued to soar Friday, just days after it announced it would merge with Former President Donald Trump’s new media company. That company is known as Trump Media & Technology Group (TMTG).
DWAC nearly tripled in the first minute of trading Friday before trading was temporarily halted. It then gave up a chunk of those gains and was sitting on a 93% gain at $88.78 as of noon EST. It had gotten up to $175. On Thursday, the company’s stock more than quadrupled from $9.96 to $45.50.
The surge in the price of DWAC shares indicates some investors are betting on the media company’s success. Some investors appear to be believers in Trump’s ideology, while others see a chance for the company to quickly gain a big audience.
A big chunk of investors, though, appeared simply to be grabbing a chance for a quick profit. Several threads on Reddit’s WallStreetBets forum had users bragging about how much money they made by jumping in and out of DWAC.
Another factor that may be playing into the price jump of DWAC shares is how well-financed the media company is, virtually from day one. DWAC is a Special Purpose Acquisition Company (SPAC), meaning it raised money publicly from investors with the goal of finding a private company to merge with. Also known as “blank check” companies, SPACs were wildly popular earlier this year. However, activity had been receding as regulatory scrutiny on them increased and interest in them dimmed.
DWAC raised nearly $300 million last month, with investors having no idea where that money would be going. All they knew was that DWAC was looking to invest in “middle-market emerging growth technology-focused companies.” At least one hedge fund manager sold his entire unrestricted stake in DWAC after learning it was merging with TMTG.
“Many investors are grappling with hard questions about how to incorporate their values into their work. For us, this was not a close call,” said Boaz Weinstein with Saba Capital in a statement to the New York Times.
While he earned a slight profit on the sale, Weinstein missed out on most of the 357% gain DWAC shares experienced in the day following the merger announcement.