(Bloomberg) — The shell company tied to Donald Trump’s media venture received a new wave of support from retail investors, bolstering its status as the best market performer of its kind.
Traders rushed into Digital World Acquisition Corp., the special-purpose acquisition company merging with Trump Media & Technology Group, on Tuesday following the launch of the former president’s social media network Truth Social.
Shares of DWAC soared as much as 17% before paring gains, as Truth Social became the top free app in Apple’s App Store. It rose 10% Tuesday to the highest level in four months on volume that quadrupled what occurred in the past week. Warrants ended the day higher by 9% to $28.98.
DWAC is running counter to a fizzling market for SPACs overall. Fueled by both fervent Trump supporters and people hoping to cash in on the gains, the SPAC is by far the best performing company in that space. It’s evolved into a way for those backing a Trump 2024 presidential run to show their support.
The app’s debut had problems, however, as some interested users were unable to sign up and others received error messages. It’s now telling prospective users there’s a lengthy waiting list to register, with the message “We love you, and you’re not just another number to us. But your waitlist number is below.” By 9:50 a.m., the queue was approaching 400,000 users and people were sharing screenshots of their numbers on Twitter.
The service is hosted by RightForge LLC, a web infrastructure company founded as a response to mainstream technology firms taking action against misinformation and hate speech. RightForge markets itself as a “depoliticized” server company and raised $1.41 million by December 2021, according to the most recent U.S. Securities and Exchange Commission filings, up from $260,000 four months prior.
Digital World’s trading has been volatile. The SPAC has rallied more than 830% since going public, with shares trading as high as $175 on Oct. 22 before plummeting more than 60% over the next week.
No Clarity
There’s been little insight for investors into how Trump Media will operate as a company. Currently, the plan is for a social network, a streaming service, a news channel and eventually a cloud-computing platform.
Regulatory scrutiny is already plaguing the venture. The SEC is looking into its board of directors, along with the trading in the stock and the identities of certain investors.
Still, excitement from retail traders was notable Tuesday, with the SPAC the sixth-most actively traded stock on Fidelity’s platform. The ticker was trending on popular chatroom Stocktwits and touts on Reddit’s WallStreetBets forum were second only to an exchange-traded fund that tracks the S&P 500 Index at the start of Tuesday’s session.
“For conservative investors, it’s a trophy asset, sort of like GameStop was for the Reddit Apes,” said Max Gokhman, chief investment officer at systematic money manager AlphaTrAI Inc. “Everyone is waiting to see if the ‘Trump Truth Train’ can gather steam or if it goes off the tracks.”
(Updates share movement throughout.)
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