- DWAC stock spiked 20.1% on Monday in response to Elon Musk ending bid for Twitter.
- The social media SPAC shares have given back 3.8% in Tuesday's premarket.
- Digital World board members have received subpoenas by federal prosecutors.
Digital World Acquisition Corp (DWAC) is giving back on Tuesday some of its massive gains from Monday. Shares dropped 4.8% to $28.02 at the open. The special purpose acquisition company (SPAC) set to merge with Trump Media & Technology Group closed up an incredible 20.1% on Monday after Elon Musk announced that he would be ending his pursuit of a Twitter takeover.
DWAC stock news: Rallying on "bullshit"?
DWAC stock relevance on recent Elon Musk's news is that the $44 billion buyout attempt of Twitter earlier this year put the bigger social media company in direct competition with the SPAC. This is due to Musk saying he would allow former president Donald Trump back onto the platform after he was kicked off in early 2020 after spearheading an insurrection at the US Capitol. Bringing Trump back to Twitter and thus many of his fans may have made the target of DWAC obsolete. After all, the Trump Media & Technology Group's Truth Social platform was ideated as a forum for conservatives outside of the liberal-owned social media giants.
With Musk's acquisition over, although the lawsuit with Twitter in the Delaware Chancery Court should last awhile, DWAC was simply rallying on the idea that Truth Social had gained a renewed purpose.
Donald Trump himself, however, did not seem excited about Musk's decision. In a speech shortly after the announcement of Musk walking away from the deal, the former president called Musk a "Bullshit artist". The Tesla founder followed up with the following tweet:
It sure seems as if Trump would have rather been on Twitter than on his own Truth Social platform. Was that because the merger now seems less likely to happen?
News that a grand jury formed in the Southern District of New York was issuing additional subpoenas to the company and its executives several weeks ago has made the merger seem like more of a dream. The grand jury is said to scrutinize whether or not the officers behind DWAC had already discussed a merger with TMTG before raising funding for DWAC since doing so would constitute a crime.
With both a federal grand jury and the Securities & Exchange Commission muddling the water, it would not seem like a good bet when a failure to merge would have DWAC hand back $10 for each share.
DWAC stock forecast: Bulls get some hope
Having already stated my criticism, there is at least one point of optimism for the DWAC stock bulls out there. Monday's rally was able to drive past the 21-day moving average. This is an achievement that has not been witnessed since Jun 7. It would be hard to imagine this one climbing back to resistance at $37, however, unless the grand jury and the SEC come up empty. Only those events could turn around the reputation of DWAC.
DWAC daily chart
