Shares of the blank-check acquisition company, which plans to publicly list former US President Donald Trump’s new social media venture, fell on Monday after an eye-watering rally last week as a short-seller said it was betting against the company.
Digital World Acquisitions, a Miami-based special purpose acquisition company (SPAC), fell 10.98%, its first declining session since Wednesday’s announcement that it would merge with Trump’s media company to create a social media app called TRUTH Social. Will do
The stock jumped after the announcement and is up more than 700% since the unveiling of the deal.
Earlier on Monday, short seller Iceberg Research tweeted https://twitter.com/IcebergResear/status/1452699920641650690 that it was betting on the company’s shares.
“We are low $DWAC. Now that the initial excitement has passed, we only see a risk to investors in the near future. Based on Trump’s track record, it is possible for him to hold a higher stake in the merged company at the current price. Likely,” Iceberg Research tweeted.
Iceberg, which publishes a blog accompanying his research on WordPress, drew attention in 2015 for exposing aggressive accounting practices at Hong Kong-based commodity trader Noble Group. Noble denied the allegations but later saw his profits decline and was forced to sell most of his assets.
The company said earlier this year that the short popular meme stock is AMC Entertainment Holdings.
The recent surge of Digital World acquisitions is reminiscent of the meme stock frenzy in 2021, when an army of retail investors on Reddit fueled a hyper-rally in Gamestop Corp., AMC Entertainment Holdings and other stocks.
Twitter, Facebook and other social media platforms banned Trump from his services after hundreds of his supporters rioted at the US Capitol on January 6.
TRUTH Social is slated for a beta launch next month and a full rollout in the first quarter of 2022.
SPACs allow private companies to publicly list their shares, bypassing traditional initial public offerings.
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