Topline
Shares of Digital World Acquisition Corp (DWAC), the special purpose acquisition company that said it plans to take former President Donald Trump’s social media site Truth Social public, dropped more than 9% late Monday morning after reports emerged that Twitter was poised to accept an acquisition offer from billionaire Elon Musk.
Elon Musk offered $43 billion to buy of Twitter.
Key Facts
Twitter shares jumped more than 3% following the news that the company was closing in on a deal to sell itself to Musk for $54.20 per share in cash.
Shares of DWAC, meanwhile, fell following reports Twitter could make the deal official as soon as Monday, though the Wall Street Journal reported it was still possible the agreement could collapse during final negotiations.
The drop comes after DWAC shares were down 4% last week after Fox News denied reports it had created an account on Truth Social.
Key Background
Trump announced he would launch his own social media site to counter “liberal” media platforms last October after he was barred from major platforms following the January 6 insurrection. The CEO of Trump Media & Technology Group, former congressman Devin Nunes, said the app would be fully operational by the end of March, but in the weeks that followed, the site was plagued by technological glitches, with millions stuck on the public wait list. DWAC is being investigated by the Securities and Exchange Commission over claims it held conversations with Trump before going public last year. Shares of DWAC also fell more than 10% in early April following news that the company’s heads of technology and product development had quit. The company initially traded as high as $175 per share after the initial announcement of its merger with Truth Social in October. Twitter shares, meanwhile, have continued to rise following news earlier this month that Musk, the CEO of Tesla and SpaceX, had submitted a bid to purchase the company. Musk disclosed in an SEC filing last week he secured $46.5 billion in funding for his Twitter bid.
What To Watch For
Whether Musk’s takeover of Twitter could spell further trouble for Truth Social. Trump has proposed the social media site, which is modeled heavily after Twitter, as a free speech alternative to social media giants. But Musk has openly questioned if Twitter’s policies infringe on freedom of speech and has suggested he might change the company’s moderation practices if his bid is successful, potentially making Truth Social less attractive to users.
Further Reading
Donald Trump’s Newest Problem: Elon Musk (New York Times)
Trump’s Truth Social SPAC DWAC Down More Than Four Percent At Market Open (Forbes)
Twitter Jumps Over 3% Amid Reports That It Will Accept Elon Musk’s Buyout Offer (Forbes)
Source: https://www.forbes.com/sites/madelinehalpert/2022/04/25/trumps-truth-social-spac-down-more-than-9-following-reports-twitter-is-nearing-a-deal-with-musk/