Last Wednesday, Former US President Donald Trump announced the creation of his media company, Trump Media and Technology Group (TMTG), and its planned merger with Digital World Acquisition Corp (NASDAQ:DWAC).
Within four days, the NASDAQ-listed DWAC stock had grown by 740%. At the close of Monday's session, DWAC was trading at $83.86. After-hours trading sees the stock up by 3.98% to $87.20.
Arguably, the DWAC price rise could indicate it is the latest in a long line of 'meme' stocks, with retail traders plowing into the stock for the sake of entertainment.
Although, this might be a dismissal of Trump's immense popularity among Americans. He is, after all, the presidential candidate that garnered the second largest number of votes in US election history (after President Joe Biden, of course).
TMTG and DWAC would represent the only publicly-listed entity tied to Former President Trump (after Trump Hotel & Casino (NYSE: DJT)). Thus, demand from his supporters might be in line with DWAC's price rise.
What We Know About Trump Media and Technology Group
TMTG is planning several launches over the next year. The first and perhaps most glorious undertaking is a social media platform called TRUTH Social, set to be released at the start of 2022.
It is unknown whether the platform will be based on Facebook (NASDAQ: NASDAQ:FB), Twitter (NYSE: NYSE:TWTR), or YouTube, all of which are sharing platforms that have banned the former President's profiles.
Based on Trump's Statements, Truth Social will likely imitate the likes of Twitter, with short, concise Tweet-like posts referred to as TRUTHS.
What We Know About Digital World Acquisition Corp
Founded in 2020 and based out of a shared WeWork Inc (NYSE:WE) office in Miami, DWAC is a Special Purpose Acquisition Company (SPAC) listed to merge with a US technology, fintech, or financial services business.
DWAC is controlled by the founder of Benessere Investment Group, Patrick F. Orlando, and Luiz Philippe de Orleans e Braganca, a businessman and member of the National Congress of Brazil.
Orlando, acting as DWAC's CEO, is a former derivatives trader at Deutsche Bank (DE:DBKGn) (ETR: DBK) and serial SPAC lister.
While Orlando has launched four SPACs, raising hundreds of millions of dollars in the process, he has failed to push any of them over the line and complete a merger.
With the stock price rally of DWAC, Orlando's chances of achieving a SPAC merger are looking more probable than ever.
DWAC Skepticism
DWAC has already generated its fair share of criticism for scant financial details and planning. Kristi Marvin, chief executive of SPAC Insider, notes,
"We don't know how they got to the valuation. We have no information. That's the fundamental problem."
DWAC merger deal with TMTG values it at $875 million.