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Digital World Acquisition Corp. (DWAC) stock fell early Monday after Elon Musk reinstated former President Donald Trump’s Twitter account Sunday. The special acquisition company, which is aiming to take Trump’s own social media platform public, is also set to have a another shareholders vote Tuesday, in an attempt to extend the deadline to complete the merger.
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DWAC stock fell about 3% Monday ahead of market trading. The shares advanced 7.2% on Friday.
On Friday evening, Tesla (TSLA) CEO Elon Musk, who took over Twitter on Oct. 28, posted a poll from his account asking members of the public to weigh in on whether Trump’s account should be reinstated. Twenty-four hours later, Musk tweeted that “the people have spoken. Trump will be reinstated.”
The Twitter poll appeared to have more than 15 million responses with 51.8% of votes in favor of Trump returning to Twitter.
The Musk And Trump Affair
However, Trump has said he will not return to Twitter.
“I don’t see any reason for it, they have a lot of problems at Twitter, you see what’s going on. It may make it, it may not make it,” Trump said during the Republican Jewish Coalition’s annual leadership meeting on Saturday.
Trump also signaled on Truth Social that he would be sticking with his social media platform and not begin tweeting gain.
“Vote now with positivity, but don’t worry, we aren’t going anywhere. Truth Social is special!” Trump wrote on Saturday.
Musk seemingly responded on Twitter Sunday, posting an imagine depicting a woman, representing Twitter, and a priest, representing Trump.
“And lead us not into temptation,” the billionaire wrote.
DWAC Stock And The Trump Brand
DWAC is a special purpose acquisition company attempting to take the former president’s tech and social-media platform public in the sort of reverse merger that was popular several years ago. The company reported last week it has continued to hemorrhage money. The SPAC said it lost roughly $3.4 million in the latest quarter ending on Sept. 30, according to SEC filings. The group has lost $9.6 million so far in 2022.
The future of DWAC and its efforts to take Trump Media and Technology Group public are tightly bound up in the value of the Trump brand. Another presidential bid is seen as a big boost for the brand. Trump Media is the parent of the conservative social-media platform Truth Social.
DWAC stock dropped last week after Trump officially announced he will once again seek the Republican nomination as presidential candidate in 2024. This was a turnaround after DWAC stock had surged around 70% in early November on news that Trump’s presidential bid was imminent. DWAC stock is currently up around 50% in November.
DWAC stock had also tumbled after the midterm elections, as Republicans fell well short of expectations. The performance was read by some as a repudiation of candidates backed by Trump. Given the doubts raised by midterm results, another presidential run is the clearest short-term path to bolstering Trump’s brand appeal.
DWAC Shareholder Meeting
In early November, DWAC stock shot up after the SPAC delayed a shareholder vote — for the sixth time — on whether to approve a year extension to complete its merger with Trump Media.
The shareholders meeting is now set for Nov. 22, but the shot clock is ticking. DWAC’s deadline to complete its merger with Trump’s company had originally been in early September. However, the SPAC has claimed a Securities and Exchange Commission investigation of the deal delayed the proceedings.
With DWAC shareholders failing to complete a vote in September, the SPAC’s sponsor, ARC Global Investments, contributed about $2.9 million to extend the merger deadline until Dec. 8, according to federal filings. The vote arranged by DWAC management gives shareholders an opportunity to extend the deadline until Sept. 8, 2023.
Now that DWAC has funding, the SPAC technically has until Dec. 8 to get the votes to approve the extension.
A presidential bid could be enough to urge shareholders to vote to extend the deadline. Otherwise, DWAC has warned investors that if the yearlong extension is not granted, the company could potentially cease operations and liquidate shares.
In an SEC document, DWAC revealed that from Sept. 19 to Sept. 23 it had received termination notices from private investment in public equity (PIPE) investors representing some $139 million. In its quarterly report on Aug. 23 it reported it lost $6.2 million in the first half of the year. And according to its most recent filing, it is continuing to lose millions of dollars.
DWAC Stock With Musk In Charge Of Twitter
DWAC stock’s recent volatility comes as Musk has taken charge of Twitter, changing how the social media platform is run.
Musk has slashed roughly half of the social media site’s staff while tweeting frequently about his plans and politics. Musk has also responded personally to customer complaints and suggestions. There has been widespread confusion over verification features being rolled out and there is speculation the company could enter bankruptcy.
On Friday, Musk tweeted “new Twitter policy is freedom of speech, but not freedom of reach.”
Musk said “negative/hate tweets” would be demonetized and that other users will not be able to find the tweet unless they specifically search for it. Musk added this applies to tweets only and not to accounts.
Musk’s focus on Twitter is damaging Tesla stock, according to some analysts. Tesla shares have around 20% since Musk took over Twitter on Oct. 28. On Monday, Tesla stock dropped 2.4% early.
Musk also sold 19.5 million Tesla shares for $3.95 billion on Nov. 4, 7 and 8. The decision to sell some of his Tesla stock came just days after Musk finalized his $44 billion purchase of Twitter.
Last week, Musk testified in a Delaware court to defend himself in a shareholder lawsuit.
While testifying, Musk said he expects to “reduce my time at Twitter and find somebody else to run Twitter over time,” according to news reports.
DWAC Stock Well Off Highs
Truth Social launched after Twitter shut down Trump’s account following the Jan. 6 riot at the U.S. Capitol. Some industry observers contend that a return to Twitter could redirect a large portion of Truth Social’s audience to the more mainstream channel.
DWAC stock is down 87% from its Oct. 22, 2021, high of 175, marked just after news of the Trump merger deal broke.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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Read More: DWAC Falls After Musk Reinstates Trump’s Twitter Account
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