The 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 that the two companies had lined up an estimated $1 billion from investors for TRUTH social.
Digital World Acquisition Corp.'s stock price was up 25% last week after a sell-off last month. The company's market cap is $2 billion.
DWAC and Trump Media & Technology Group Corp. had an interesting week, with DWAC describing the TRUTH Social site and accompanying app 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 promising more than a billion dollars to TRUTH Social. Private investments in public equity will function as "PIPE" investments, even though the identity of the investors is not known.
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 began in early November. Following the October 20 merger announcement, the Financial Industry Regulatory Authority began looking into the partnership.
The company said it was cooperating with both the SEC and the FINRA, and that neither agency had found any indication of wrongdoing.
The hedge fund said it had bought back its stake in DWAC despite the SEC probe. The merger of Trump's company with DWAC caused shares to soar and caused two investment firms to pull their investments.
"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.
The site and app are expected to launch in early 2022, after an invite-only trial in November.
The pitch deck for TRUTH Social stated that it was intended 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 power to silence opposing voices in America.
Critics have noted how little information has been made public. This company is worth $2 billion. An investor or investor has deposited $1 billion. Journalist Judd Legum said there was little evidence that the venture existed.
The former president was banned from several major social media sites for policy violations earlier this year.
