– Stock surge of up to 70% for Digital World Acquisition Corp following Ron DeSantis dropping out of the race for Republican presidential nomination, indicating growing enthusiasm for Trump Media and its merger with Digital World.
– The surge brings retail investors closer to the completion of the delayed merger and highlights the dire financial situation of Trump Media, making the merger crucial for the company’s survival.
Well, folks, here’s a twist in your finance news diet. The special purpose acquisition company (SPAC), Digital World Acquisition Corp, which is planning to merge with former President Donald Trump’s social media company, experienced a stock surge of up to 70 percent on Monday. Now, if you’re wondering why we should care about a stock surge, it’s because this isn’t just any old rise. It followed Florida Governor Ron DeSantis’s decision to drop out of the race for the Republican presidential nomination. Suddenly, the path to a Trump nomination seems a little less cluttered, and it seems stock market aficionados are celebrating the possibility with a spending spree.
The stock jump reflects a growing enthusiasm for Trump Media, a company that’s had more ups and downs than a roller coaster ride at Disneyland. It’s been trying to merge with Digital World to tap into the $300 million raised in the latter’s initial public offering. This is a crucial lifeline for Trump Media, which needs to sustain and expand its business operations. The stock has more than doubled since Trump won the Iowa caucuses, and now trades around $44, its highest stock price since spring 2022. So, it seems like the Trump train is back on the track, or at least that’s what the investors seem to think.
Now, this surge in stock value isn’t just a big deal for Wall Street types, it’s also significant for the approximately 400,000 retail investors who largely own the company. It brings them one step closer to the completion of the delayed merger with Trump Media, and Truth Social, which serves as Trump’s personal playground for expressing his “unfiltered” views. Interestingly, despite the fanfare, Trump Media has been operating on financial fumes. It managed to generate around $3.3 million in advertising revenue in the first nine months of 2022 but had losses totaling approximately $49 million in the same period.
This dire financial situation has left accountants questioning how long Trump Media could continue to operate without a good-old cash infusion. Hence, the merger with Digital World has become as essential as a cup of coffee on a Monday morning for Trump, who, once the merger is completed, will become the largest individual shareholder in the combined entity. However, the merger has had to navigate around more obstacles than a contestant on a reality TV obstacle course. It has been delayed due to an SEC investigation into early deal discussions, insider trading allegations, and an $18 million penalty.
Yet, despite these hurdles, the companies are hopeful that the merger will be finalized by the end of March. Digital World is also in talks with investors to raise an additional $50 million, mainly by selling interest-bearing promissory notes that could convert into company stock, although no concrete agreements have been reached. So, as the saying in the financial world goes, “Buy on the rumor, sell on the news”. This latest surge in stock value signifies market confidence in Trump Media’s potential success and investors can’t wait to see what new twists this merger will bring.