- DWAC stock retreats modestly after adding 20.1% on Monday.
- The social media SPAC shares have given back roughly 3 % on Tuesday.
- Digital World board members have received subpoenas by federal prosecutors.
Update: Digital World Acquisition Corp (DWAC) shares retreated on Tuesday, ending the day 2.95% lower at $28.58 per share. Little compared to the 20% plus added on Monday. Wall Street tried to turn positive to no avail, with the three major indexes closing the day in the red. Right after the opening, equities rose on the back of a White House memo, which noted that US macroeconomic data, including the June jobs report, are not consistent with a recession. The document added that “labor market strength puts the US in a better position than many other countries to transition to lower inflation and steady growth.”
The advance was short-lived, and stocks turned south one hour ahead of the close as fears remain while cautious ahead of US inflation data sunk in. The country is expected to report that the June Consumer Price Index jumped to 8.8%, a new multi-decade high. Some analysts, on the other hand, are positive about the fact that energy price pressures receded in the month, and will likely see inflation easing from its record peak.
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.
Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries
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:
I don’t hate the man, but it’s time for Trump to hang up his hat & sail into the sunset.
— Elon Musk (@elonmusk) July 12, 2022
Dems should also call off the attack – don’t make it so that Trump’s only way to survive is to regain the Presidency.
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
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