It's a bird, it's a plane, it's...possibly another meme stock?
Digital World Acquisition, the special-purpose acquisition company (SPAC) now tied to the latest media and technology venture of former President Donald Trump, saw its stock soar Friday morning, "triggering a halt for volatility" after quadrupling on Thursday, Bloomberg reports.
The ticker by which the SPAC trades — DWAC — was "was among the most popular mentions on Reddit's WallStreetBets, which indicated that DWAC could be having a meme stock moment like GameStop and AMC," writes CNBC. DWAC was the "single most actively traded stock" on Fidelity's brokerage platform on Thursday, with fans of the ex-president pumping the stock online, per Bloomberg.
SPACs work by going public and raising money from investors first, only to then find a private company to merge with, explains The New York Times. Consequently, investors that back a SPAC initially "have no clue" who a merger partner will turn out to be. That means some of DWAC's big investors were likely unaware they were supporting Trump Media and Technology Group until a deal was reached to merge the two companies on Wednesday.
Since that announcement, shares of DWAC have proved "a hit" with day traders, skyrocketing 1,225%, writes Bloomberg. Its price "nearly tripled" to $131.90 when the market opened Friday morning.
The ex-president hopes the deal — which values his media company at about $875 million, including debt — gives him enough cash to launch a new social media app in 2022 dubbed TRUTH Social, whose purpose is "to create a rival to the liberal media consortium and fight back against the 'Big Tech' companies of Silicon Valley." Unfortunately for him, however, it looks like some hackers have already started that war's first battle.