Dear DWAC Stock Fans, Mark Your Calendars for September 6th

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Digital World Acquisition Company (NASDAQ:DWAC) is about to end the summer in style. DWAC stock has lost 70% of its value in the past six months. It is not difficult to understand why. The DWAC was not done with regulatory investigations into its board of directors when the FBI raided Donald Trump’s Mar-a-Lago estate. The investigation into the former president isn’t expected to wrap up any time soon, but his company’s Special Purpose Acquisition Company (SPAC) partner isn’t taking any chances. The company with the blank check wants to delay its merger with the Trump Media and Technology Group (TMTG) and asks investors to vote on it. September 6 marks the shareholders’ meeting.

Specifically, the company wants to push back the merger deadline to September 8, 2023. Since filing this petition, DWAC stock has been trending lower. It fell more than 14% last week and this one is not starting any better this week. Stocks are down 6% for the day and there is no sign that DWAC will rebound anytime soon. Usually, investors are asked to mark their calendars for a deadline that promises to boost stocks. But in this case, September 6 represents the last day to sell before it falls even further.

Let’s take a closer look at what investors can expect.

What happens with DWAC actions

It makes total sense that DWAC would be nervous about the merger. SPAC knows he hitched his wagon to an unreliable horse. When news broke in 2021 that Trump would be launching a social media company, DWAC stock became an overnight sensation. In the months that followed, the powerful anticipation sent stocks soaring as the world awaited the debut of Truth Social. But since launch, the platform has failed to get the kind of traction it needed to keep DWAC stock in the green. Even as an app downloads increased followed the Mar-a-Lago raid, it didn’t drive the shares up.

In April 2022, a short report of Kerrisdale Capital argued that DWAC would not be able to complete the merger. The short seller saw this as a reason to bet against DWAC stock. Now, the company does not seem to want to complete the merger because it does not trust the stability of its partner. CNBC indicates that the blank check company is consider liquidation if shareholders do not vote in favor of extending the deadline. While this threat will likely ensure investors back it, that doesn’t mean DWAC stock is destined for growth. Truth Social has proven that despite all the hype that led to its launch, it lacks the ability to grow, scale, or deliver real value. Even Trump’s exclusive content offering didn’t give the platform the boost it needed. And while Trump may soon officially declare his 2024 campaign, that prospect has yet to generate lasting momentum.

The essential

The DWAC is counting on the possibility of pushing the deadline out long enough for a Trump-related catalyst to occur and push the stock high enough to revive the business. But if that doesn’t happen, and there’s absolutely no guarantee or reason to think it will, eventually the extension will no longer be relevant and DWAC stock will end up in the red.

Investors will watch that date carefully, but if the company keeps open the possibility of a floating liquidation, fewer and fewer shareholders will stick around for the vote.

At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to publishing guidelines.

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