dwac stock rises

Tesla’s CEO Elon Musk has announced that he would not be buying Twitter. While Twitter stock is crashing in US premarket price action today, DWAC, the SPAC (special purpose acquisition company) that is taking Donald Trump’s TMTG (Trump Media & Technology Group) public is trading sharply higher.

Last year, DWAC announced a merger with TMTG which is backed by Trump. TMTG has launched its social media platform called Truth Social, which is live on the Apple app store. The platform however is still not available on Android devices. TMTG also intends to get into streaming and compete with Netflix and Disney+.

Truth Social has been trying to capitalize on Trump’s popularity. Trump’s Twitter account was suspended in 2020 following the Capitol Hill violence. Truth Social has gained some traction among conservatives but otherwise, many have been complaining about the user experience of the Twitter-lookalike.

DWAC’s merger with Truth Social is the most high-profile SPAC merger since Lucid Motors and Grab were listed last year. DWAC stock soared to a high of $175 which is quite unheard of in the SPAC space. However, the deal has been facing several issues including a FINRA inquiry.

In its SEC filing, DWAC said, “According to FINRA’s request, the inquiry should not be construed as an indication that FINRA has determined that any violations of Nasdaq rules or federal securities laws have occurred, nor as a reflection upon the merits of the securities involved or upon any person who effected transactions in such securities.”

DWAC is Facing Subpoena over Alleged Irregularities

DWAC also revealed a subpoena from a federal grand jury. While these legal troubles have been weighing heavy on the stock, Musk’s proposal to acquire Twitter hasn’t helped matters either. Truth Social was positioned as an alternative to Twitter whose content moderation policies had not gone down well with many conservatives.

Musk claimed that he is a “free speech absolutist” and wants Twitter to realize its potential. He said in his SEC filing, “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”

Initially, Twitter’s board rejected Musk’s offer but eventually relented as the world’s richest person offered a massive premium for Twitter stock. Twitter stock crashed on Friday when news reports suggested that Musk’s offer to buy Twitter was in jeopardy.

Twitter Stock is Falling while DWAC Stock is Rising Today

DWAC stock is trading higher today after Musk formally ditched the Twitter deal. Notably, DWAC stock crashed after Musk announced the Twitter acquisition. He also proposed restoring Trump’s Twitter account but Trump turned him down.

While most newly listed stocks have crashed from their IPO price, DWAC is still trading comfortably above the IPO price. A lot of Trump supporters have been buying DWAC stock even as the overall sentiments towards SPACs have been quite negative.

Growth stocks and stocks of loss-making companies have anyways crashed in 2022. However, value and energy stocks have outperformed. Even Warren Buffett has been pouring money into energy stocks and Berkshire Hathaway has invested another $700 million in Occidental Petroleum to take its stake to 18.7%.

Usually, asset managers like Berkshire provide their portfolios on a quarterly basis within 45 days of a quarter’s end. However, since Berkshire’s stake in Occidental has surpassed 10%, the company needs to file its purchases with the SEC within two days. Buffett also bought the dip in Apple stock in the first quarter and the upcoming 13F for the second quarter would reveal whether the “Oracle of Omaha” bought more Apple shares in the second quarter.

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