On Friday, shares of the blank-check acquisition business that hopes to publicly list former US President Donald Trump’s new social media venture rose again, more than tripling in value despite numerous trading halts due to volatility.
After hitting a high of $175, Digital World Acquisition (DWAC.O), a Miami-based special purpose acquisition company (SPAC), closed up 107 percent at $94.20 on Nasdaq.
On the news that it will merge with Trump’s media business to establish a social media program called TRUTH Social, Digital World’s stock rose more than 350 percent on Thursday, a day after the transaction was announced, giving it a market valuation of about $1.5 billion.
Its recent activity was reminiscent of earlier this year’s meme stock frenzy when an army of retail investors banded together on online forums to propel shares of GameStop Corp (GME.N), AMC Entertainment Holdings (AMC.N), and other stocks higher.
“This has the feel of a meme stock. This appears to be a repeat of AMC and GameStop “Joe Saluzzi, trading co-manager at Themis Trading in Chatham, New Jersey, agreed.
On Thursday, according to data from brokerage Fidelity, Digital World was the most actively traded stock on its platform. It was the most talked-about stock on the trading-focused social media site Stocktwits, which is often used to gauge retail investor interest.
Hedge funds that invested in Digital World are expected to make five times their money, according to regulatory records, while Patrick Orlando, the SPAC’s backer, is expected to profit $420 million from the stock’s rise.
However, not everyone was a buyer. As word broke that Digital World was combining with Trump’s new media venture, hedge fund manager Boaz Weinstein said he liquidated his firm Saba Capital Management’s interests in the company early on Thursday.
“I knew that selling our whole ownership of unrestricted shares was the correct thing to do for Saba,” Weinstein stated in a statement. Digital World had agreed to pay Trump Media and Technology Group $293 million in cash.
