The stock price of Digital World Acquisition Corp. (DWAC), a special purpose acquisition company, soared this week.
The company, intends to take President Donald Trump's forthcoming digital media platform public through a merger, is now worth $2 billion.Earlier this week, DWAC revealed the deal was being investigated by the US Securities and Exchange Commission and other regulators.
Shares of the SPAC linked to former President Donald Trump's planned digital media platform surged this week, days after revelations of an SEC investigation and an announcement the two companies had lined up an estimated $1 billion from investors for TRUTH social.
The stock price of Digital World Acquisition Corp. (DWAC), a special purpose acquisition company, was up about 25% to close out the week, following a sell-off last month. The company's market cap now stands around $2 billion.
The spike came after an eventful week for DWAC and Trump Media & Technology Group Corp. (TMTG), which has described aspirations for the TRUTH Social site and accompanying app to serve as "a conservative media universe"with "non-woke content."
A week ago, the two companies announced they had reached a deal to fund the site, with investors pledging more than$1.25 billion to TRUTH Social, according to apress release. While the identity of the investors remains unknown, the funding will function as "PIPE" investments, or private investments in public equity.
Then, on Monday, it was revealed the deal was being investigated by the US Securities and Exchange Commission and other regulators,according to a report filed with the SEC. The investigation, according to the filing, began in early November. The Financial Industry Regulatory Authority (FINRA), a private regulator, also began looking into the partnership in late October followingthe October 20 merger announcement.
The company noted that neither FINRA nor the SEC had found any indication of wrongdoing, and the company said it was cooperating with both agencies.
Following news of the investment pledge, and apparently despite the SEC probe, hedge fund Saba Captial Management on Thursday said it had repurchased a stake in DWAC. Saba and Lighthouse Investment Partners pulled their investments in DWAC in October as shares soared following the merger announcment with Trump's company.
"Digital World Acquisition Company falls into the meme-stock category, and it's sometimes prone to posting big pricing swings on relatively little news,"the Motley Fool said of the latest share price swing.
TMTG said in October that the site and accompanying app is expected to launch in early 2022, following an invite-only beta trial in November.
In apitch deck for TRUTH Social, TMTG stated that it aimed to "create a media powerhouse to rival the liberal media consortium and fight back against the 'Big Tech' companies of Silicon Valley who have used their unilateral power to silence opposing voices in America."
Critics have noted how little information has been unveiled about the workings of Truth Social. "This is a company purportedly worth $2 BILLION. An unknown investor or investors have kicked in $1 BILLION. But there is little evidence it really exists," journalist Judd Legum said in a series of tweets about the venture.
Trump's announcement of the platform came after the former president was permanently banned from several major social media sites for policy violations earlier this year, including Facebook, Twitter, and YouTube.