DWAC stock suffers biggest drop in 2 months after Trump Media merger cleared (2024)

DWAC stock turns lower after Trump Media merger approved

Shares of Digital World Acquisition Corp. ended the day just off the lows of the day, as investors suffered their worst day in two months.

The stock was down 14.9% at its intraday low of $36.44, hit just minutes before the close, before recovering slightly to end the session down 13.7% at $36.94.

That was the biggest one-day selloff since it tumbled 24.8% on Jan. 24. But that drop followed a tripling in the stock -- up 200% -- during a record seven-day win streak through Jan. 23.

Friday's selloff comes after the DWAC was cleared to finally complete the merger that will take former President Donald Trump's social-media company public, 17 months after the deal was announced.

After Digital World Acquisition Corp.'s merger with Trump Media & Technology Group Corp. closes, former President Donald Trump is expected to own 78,750,000 shares of the combined company.

That would represent 69.4% of the outstanding shares, assuming maximum redemptions by DWAC shareholders, according to the latest S-4 filing with the U.S. Securities and Exchange Commission.

Trump would be by far the largest shareholder. Why not, the company's stock ticker post-merger will be his initials, "DJT."

ARC Global Investments, which is the investment vehicle of former Chief Executive Patrick Orlando. is expected to be the second-largest shareholder, with 10,790,415 shares, or 9.3% of the shares outstanding.

Current CEO of Trump Media, Devin Nunes, would own 115,000 shares, or less than 1%.

Donald Trump Jr., who is expected to be a director of the company post-merger, isn't listed as expected to own any shares after the deal closes.

Interest in trading Digital World Acquisition Corp.'s stock has dropped off since the morning, as it has drifted downward toward the day's lows.

The stock has a seesaw, active start to Friday's session. After swing from a early gain of as much as 12.1% to a decline of as much as 12.2% on heavy volume, it bounce back to peek into positive territory just after noon.

Since then, it has steadily trended lower, in low-volume trading.

It was down 10.4% in recent trading, as excitement over the shareholder vote to approve the merger with Trump Media faded.

In Digital World Acquisition Corp.'s latest audited quarterly report, the the company said it had more then $300 million in cash.

The company disclosed in its 10-Q filed in November said that it had assets of $310.5 million as of Sept. 30, 2023, which included $3.3 million in cash in hand and $307.2 million in cash held in trust.

But keep in mind that in the court filing earlier this week, in which DWAC sued its former CEO's investment vehicle ARC Global Investments, seeking to force it to vote in favor of the merger with Trump's social-media company, DWAC said ARC's refusal to vote has cost DWAC "millions of dollars in unnecessary expenses."

DWAC hasn't filed a 10-Q for the fourth quarter, and hasn't provided an update to its cash position.

While the shareholder vote to approve Digital World Acquisition Corp.'s merger with Trump Media & Technology Group (TMTG) removes some uncertainty, there's still a lot of risk factors to consider before buying the stock.

"A number of companies that were associated with President Trump have filed for bankruptcy. There can be no assurances that TMTG will not also become bankrupt."

The filing goes on to list entities and businesses that failed, including The Trump Taj Mahal, The Trump Plaza, Trump Hotels & Casino Resorts, Trump University, Trump Vodka and Trump Mortgage LLC.

The stock was recently down 4%.

After 2 1/2-years, Digital World Acquisition Corp.'s purchase of Donald Trump's social-media company, Trump Media & Technology Group, is finally about to go through.

When the deal was first announced, the stock rocketed 356.8% on Oct. 21, 2021, to close at $45.50.

After a brief dip into the next month, the rally resumed to carry the stock to a record close of $97.54 on March 4, 2022.

While the stock has soared recently, as Trump's path toward becoming the Republican nominee for president was cleared, it was still trading below where it closed the day the merger was announced.

The stock was recently down 8.1% in Friday afternoon trading. It has soared 124.9% year to date, and 195.9% over the past 12 months, but was 13.5% below the Oct. 21, 2021 closing price.

When Truth Social-parent Trump Media & Technology Group goes public, the stock's new ticker will reflect the Trump himself rather than the names of the company.

After the merger with Digital World Acquisition Corp. closes, which could be as early as next week, the ticker the stock traded on the Nasdaq exchange will change, to "DJT" from "DWAC."

Yes, DJT are the initials of Donald John Trump.

And the ticker for Digital World's public warrants, will change to "DJTW."

Donald Trump rode his success on social media to the White House. Now he's set to make billions with it.

But while the estimated $3.2 billion windfall Trump may receive from the deal could eventually fatten his wallet, it may not come in time to help Trump out of his immediate financial crisis.

Shares of Digital World Acquisition Corp. have traded in a wide range Friday, on heavy volume Friday, as investors jockey for position ahead of the closing of the merger with Donald Trump's social media platform.

DWAC's stock rallied as much as 12.1% early in the session ahead of the shareholder-vote results, then dropped as much as 10.4% after the results became known.

It has settled down a bit to trade 1.9% lower.

Trading volume has swelled to 6.8 million, which is nearly quadruple the full-day average of about 1.8 million shares.