Shares Of Trump’s Truth Social SPAC Rise After Musk Backs Out Of Twitter Deal

Topline

Shares of Digital World Acquisition Corp. (DWAC), the special purpose acquisition company with plans to merge with former President Donald Trump’s social media site Truth Social, were up 17% Monday morning after Tesla CEO Elon Musk said he planned to terminate his $44 billion deal to buy Twitter.

Elon Musk attends the 2022 Met Gala.

Getty Images for The Met Museum/Vogue

Key Facts

The spike comes as Twitter shares fell 6% Monday morning after billionaire Musk on Friday said he had informed Twitter he would back out of his deal to buy the platform.

Musk argued the social media company had provided him with “incomplete or unusable information.”

It also comes two weeks after DWAC shares plummeted amid news a federal grand jury had subpoenaed the company’s board members.

Surprising Fact

DWAC traded as high as $175 per share after its initial merger plans with Trump’s social media company Trump Media & Technology Group (TMTG) was announced. But shares began to fall after the SEC began an investigation into the blank check company in December. The stock now trades at $30 a share.

Key Background

Trump announced plans to merge with DWAC to launch his own social media site to rival “liberal” platforms last October. He did so after he was banned from major platforms—including Twitter and Facebook—following the January 6 insurrection. A grand jury in the Southern District of New York has subpoenaed TMTG as well as all members of DWAC’s board. The SEC and the grand jury are seeking documents and communications from DWAC regarding the transaction and whether it pursued due diligence on any other merger targets. The subpoenas come after the SEC launched an investigation into DWAC after reports emerged last year Trump had met with the company’s Chief Executive Patrick Orlando before it went public. The meeting could have broken SEC rules that prohibit SPACs from identifying a target company before raising money.

Tangent

It’s unclear whether a takeover of Twitter by Musk could have sparked trouble for Truth Social, a site Trump has proposed as a free speech alternative to social media giants. Musk also criticized Twitter’s moderation practices, and said he would have lifted the company’s “foolish” ban on Trump if his deal went through. Musk in recent weeks had been threatening to walk away from his offer to buy Twitter—approved by the company’s board in April—over concerns about fake and spam accounts on the platform. Twitter has said it plans to take legal action to force Musk to go through with the deal.

Crucial Quote

“I do think that it was not correct to ban Donald Trump. I think that was a mistake because it alienated a large part of the country, and did not ultimately result in Donald Trump not having a voice,” Musk said in May.