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Digital World Acquisition Corp. stock price chart in the days leading up to and including shareholder approval of the merger with Donald Trump’s social media company.
CNBC
Donald Trump told his many online followers on Saturday: “I LOVE TRUTH SOCIAL” – but shareholders of the newly merged company that will own this social media app may no longer feel the same way after a sharp price drop the day before good.
The mailbox company Digital World Acquisition Corp. saw its share price plunge nearly 14% in the hours after shareholders approved a merger with the former president’s social media company for its IPO on Friday morning.
If that decline accelerates in the coming weeks, the value of Trump’s controlling stake in the newly merged company, called Trump Media, could be slightly lower than the roughly $3 billion estimated before shareholders signed off on the deal on Friday.
DWAC stock, which hit a 52-week high of $58.72 a share on Jan. 23 when the long-stalled merger looked more likely, was at 44.20 as trading began Friday morning, just before the shareholder vote US dollars per share fell.
DWAC shares closed Friday afternoon trading at $36.94 per share.
In after-hours trading, the stock recovered slightly to $38.55 per share. But that was still 12.7% lower than Friday’s opening price.
The decline may reflect concerns about whether Trump Media & Technology Group, which is merging with DWAC, can ultimately generate significant revenue — and whether Trump will seek to cash in his stake early given his numerous legal problems.
TMTG, which owns the Trump Social platform that Trump used on Saturday to express his love for the app, reported losses of nearly $50 million in the first three financial quarters of 2023. During that period, the company had revenue of less than $3.5 million.
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Trump, meanwhile, faces more than half a billion dollars in civil judgments in federal and state courts in New York. He also faces mounting bills from those cases and four criminal charges as he seeks to unseat President Joe Biden in the November election.
Last week, Trump’s lawyers said in a court filing that he did not have the wherewithal to obtain an appeal bond for a $454 million fraud verdict in any of those cases. This would prevent the New York Attorney General’s Office from pursuing this award for the time being.
Under the terms of the merger, Trump, who will own at least 58% of Trump Media, will be barred from selling shares in the company for six months.
However, the new board, which is expected to include his son Donald Trump Jr. and other close allies, could vote to lift that restriction, which would allow him to sell shares to cover his legal fees much sooner.
This, in turn, could cause Trump Media’s stock price to fall and entice other shareholders to sell shares, which would further depress stock prices.
Trump Media will use the ticker symbol DJT when trading on the NASDAQ exchange begins as early as next week.
The same ticker was used for Trump’s former publicly traded company, Trump Hotels & Casino Resorts, whose shares traded on the New York Stock Exchange beginning in 1995.
This company lost money every year and was forced to declare bankruptcy in 2004, the same year it was delisted from the stock exchange.
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2024-03-23 18:47:20
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