Digital World Acquisition Corp shares saw a sharp stock decline following approval from shareholders to merge with Trump Media & Technology Group, amid wider scrutiny of the former president's financial obligations.
As the approval news broke early on Friday, DWAC's stock plummeted by nearly 10 percent in stark contrast to the surge that had occurred in anticipation of the merger vote. The move casts a shadow over the newly formed Trump Media, which is set to trade under Trump's initials, DJT.
The merger, coming as Trump grapples with a substantial civil judgment, could add billions to his net worth, yet the market's immediate reaction could signal investor apprehension at the deal's completion and its future prospects.
The approved merger, which could see the company IPO as early as next week, according to Axios, is the culmination of a tumultuous journey for the special purpose acquisition company (SPAC), which has been beset by legal battles and delays. Shareholders voted in favor of the deal despite recent lawsuits and a legal battle involving DWAC's largest investor, which had threatened to derail the proceedings.
Newsweek has sought comment from DWAC through its designated investor relations channel.
The stock's volatile response may also reflect concerns over Trump's ability to leverage his stake in the face of mounting legal and financial pressures. With a civil judgment of $454 million looming over him and efforts to secure a bond proving difficult, Trump's fiscal stability is under intense examination.
On Friday, Trump said on Truth Social that he has "almost five hundred million dollars in cash," which he plans to use in his campaign for president, indicating that the funds will not be allocated towards the civil penalty.
His public refusal to liquidate assets to satisfy the bond—arguing that a successful appeal would render such a move financially disastrous—has added a layer of speculation to the situation as the former president is barred from selling any shares in the newly merged entity for a period of six months post-transaction.
Trump, according to the latest ownership document filed with the SEC, will own 78,750,000 shares of the newly formed company (58.1 percent of the public float), equal to roughly $3.07 billion at current prices.
The presumptive 2024 Republican White House nominee's intentions to reserve his substantial cash position for his presidential campaign might mean that his new capital won't be immediately available to address his legal financial obligations.
The lock-up period, while constraining Trump's immediate liquidity, is standard practice within SPAC transactions to prevent large sell-offs and provide market stability as the company transitions to public trading.
Despite that, the board of the post-merger entity, potentially composed of allies, could allow Trump earlier access to his shares, providing a lifeline amidst his financial duress.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
