Shares of Trump's Truth Social SPAC (DWAC) soar after Musk pulls out of Twitter deal

Jump to heading Shares of Trump's Truth Social SPAC (DWAC) soar after Musk pulls out of Twitter deal

Shares of Digital World Acquisition Corp. (DWAC), the SPAC that plans to merge with former President Donald Trump's social media site Truth Social, were up 17% Monday morning after Tesla CEO Elon Musk announced his intention to cancel his $44 billion agreement to buy Twitter.

Musk said that Facebook had supplied him with "incomplete or useless information."

This news comes a fortnight after DWAC shares fell on reports that the company's board members had been subpoenaed by a federal grand jury.

Following the announcement of its original merger negotiations with Trump's social media business Trump Media & Technology Group (TMTG), DWAC soared as high as $175 per share. However, once the SEC launched an inquiry into the blank check company in December, shares started to tumble. The stock is now worth $30 a share.

Last October, Trump declared plans to unite with DWAC in order to build his own social media platform to compete with "liberal" networks. He did so after being barred from key networks, such as Twitter and Facebook, during the January 6 insurgency. A grand jury in the Southern District of New York has subpoenaed TMTG and all DWAC board members. The SEC and the grand jury are looking for papers and correspondence from DWAC about the deal, as well as information about whether it conducted due diligence on any other merger prospects. The SEC initiated an inquiry into DWAC after claims surfaced last year that Trump met with the company's CEO, Patrick Orlando, before it went public. The meeting may have violated SEC regulations prohibiting SPACs from designating a target firm prior to soliciting funds.

It's unclear if Musk's purchase of Twitter would have harmed Truth Social, a site Trump has advocated as a free speech alternative to social media behemoths. Musk also blasted Twitter's moderation methods, claiming that if his transaction had gone through, he would have removed the company's "foolish" restriction on Trump. Musk has threatened to withdraw his bid to acquire Twitter, which was accepted by the company's board in April, due to worries over false and spam users on the network. Twitter has said that it would take legal action to compel Musk to complete the transaction.

"I believe that excluding Donald Trump was incorrect. "I believe it was a mistake because it alienated a significant portion of the public and did not result in Donald Trump not having a voice," stated Musk in May.

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(As of July 12, 2022, funds managed by Cohanzick Management, LLC and its affiliates do not own a position in DWAC nor Twitter.)