Trump-Tied SPAC Gains as Investors Leap at Presidential Bid

(Bloomberg) — Investors snapped up shares of Digital World Acquisition Corp., the blank-check firm set to merge with Donald Trump’s social media company, after the former president hinted at plans to make another bid for the White House.

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The special-purpose acquisition company rallied as much as 31% to the highest since September in heavy trading on Monday. Warrants tied to the SPAC surged 53%, while Phunware Inc., a software company that worked on Trump’s re-election campaign, jumped 19%.

The gains for companies linked to Trump came after he repeated a boast that he’s leading in surveys for the GOP nomination. Trump is tentatively planning to announce his 2024 campaign during the week after US midterm elections, people familiar with the matter have told Bloomberg.

Digital World has been volatile as the SPAC’s sponsors fail to corral its primarily retail trader base to vote on an extension to the deadline for its merger with Trump Media & Technology Group. Shares were down 70% from a year ago through Friday’s close amid weak demand for Truth Social and as investor weigh how Elon Musk’s purchase of Twitter Inc. could affect its future.

The stock has been a favorite among the retail-trading crowd since the tie-up was announced last year. While their buying has slowed, they’ve driven the SPAC to be the top performer of its kind, with Monday’s bump it trades at a more than 110% premium to the $10.20 holders would get if the deal collapses.

“Any Trump news is going to boost interest,” said Matthew Tuttle, chief executive officer at Tuttle Capital Management. “If Trump becomes president again that could be good for DWAC, at least short term. Longer term, have to figure that if his enemies want to get him then something related to DWAC may be low-hanging fruit.”

Retail traders were actively discussing Digital World ahead of Monday’s session. The company’s ticker was trending on Stocktwits and was among the most mentioned companies on Reddit’s WallStreetBets forum, rivaling mentions for retail trader favorites Apple Inc. and Tesla Inc.

Short covering could also be driving some of the strength, an action where investors close some of their negative bets as shares rise. Nearly 13% of Digital World shares available for trading are currently sold short, according to S3 Partners data.

(Updates share movement throughout.)