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% on Monday after reports emerged that Twitter was poised to accept an acquisition offer.
Musk offered $43 billion to buy the company.
The news that the company was closing in on a deal to sell itself to Musk for $54.20 per share in cash caused the shares to jump more than 3%.
The Wall Street Journal reported that the deal could collapse during final negotiations, but DWAC's shares fell on the news.
DWAC shares fell 4% last week after Fox News denied reports that it had created an account on Truth Social.
After being barred from major platforms following the January 6 insurrection, Donald Trump launched his own social media site. The CEO of Trump Media & Technology Group, a former congressman, 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. The Securities and Exchange Commission is looking into claims that DWAC held conversations with Trump before going public. The heads of technology and product development quit at DWAC, causing the company's shares to fall more than 10%. After the merger announcement, the company traded as high as $175 per share. Following news earlier this month that Musk had submitted a bid to purchase the company, shares of the social networking site continued to rise. In an SEC filing last week, Musk said he had secured $46.5 billion in funding for his bid.
Musk's takeover of Twitter could spell trouble for Truth Social. Trump wants a social media site that is free speech alternative to social media giants. If his bid is successful, Musk might change the company's moderation practices, which could make Truth Social less attractive to users.
Donald Trump has a new problem.
Trump's truth social group was down more than four percent at the market open.
There are reports that it will accept the offer from Musk.
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