The Digital World Acquisition Corp (NASDAQ: DWAC) stock price has fallen 71% in the past year after failing to seal the deal to acquire Trump Media & Technology Group (TMTG). The company announced plans to merge with TMTG in October 2021, but its shareholders opposed the deal.
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After postponing a vote on the deal multiple times, the company finally had no choice but to call a shareholder meeting regarding the same, where the deal was rejected as expected in September 2022. The merger has also attracted legal scrutiny from the US Department of Justice and the SEC.
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The legal scrutiny around the deal has been highlighted as the critical factor behind its rejection by shareholders, given that DWAC is a Special Purpose Acquisition Company (SPAC) that had raised about $300 million to find lucrative merger deals.
The DWAC stock price soared in early November 2022 as a deal with TMTG appeared likely, but it has fallen from its highs since then as the likelihood of a deal recedes into the background. A deal with TMTG is now doubtful, and the blank cheque company faces other problems.
The company just received a delisting notice from the Nasdaq for failing to file its financial results for the quarter that ended on 31 March 2023. The company tried to allay investor fears by saying it had until July 24 to file a plan with the Nasdaq regarding how it would regain compliance.
As DWAC faces liquidation, the chances of merging with TMTG continue to shrink and threaten the $1 billion raised by TMTG to launch and found Truth Social, the social network promoted and used by former President Donald Trump.
The SPAC will have to return the funds raised to its shareholders if it can’t find a way to merge with TMTG. The chances of a merger between the two firms remain slim due to the regulatory scrutiny surrounding it.
Therefore, I would avoid DWAC stock as a prudent investor until the situation changes.
*This is not investment advice.
DWAC stock price.
The Digital World (DWAC) stock price has fallen 71% in the past year after the failed merger with Trump Media.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.