Digital World Acquisition Corp Stock News: DWAC surges on news Congressman to lead Trump social media startup

• DWAC up more than 10% after new CEO announcement.
• Digital World Acquisition Corp is a SPAC merging with TRUTH Social.
• Former president Donald Trump is chairman and majority owner of parent company.

Digital World Acquisition Corp (DWAC) closed up 16.6% on Tuesday on the back of the announcement that California Congressman Devin Nunes has decided to leave Congress to become CEO of Donald Trump's new media startup. DWAC is the Special Purpose Acquisition Company (SPAC) that has an agreement to merge with Trump Media & Technology Group (TMTG) . The volatile stock is still down 70.8% from its all-time high of $175, as well as down 2.1% to $50 in Wednesday's premarket.

Digital World Acquisition Corp (DWAC) Stock News: Devin Nunes joins TMTG ahead of PIPE

Devin Nunes (R-CA), a fiery Trump supporter during the latter's single term, will become the first CEO of Trump Media & Technology Group (TMTG). TMTG is the corporate parent that owns the as-of-yet launched social media company TRUTH Social.

A former dairy farmer himself, Nunes has no experience in the tech industry other than suing Twitter over user posts he thought were defamatory. In particular his lawsuit focused on accounts pretending to be his mother and another pretending to be one of his dairy cows. In early 2020, however, a judge said Twitter did not have a responsibility to delete or censor such satirical accounts.

Regardless, Nunes has his work cut out for him. The TMTG investor deck for the SPAC states that Truth Social expects to achieve at least 15 million monetizable social media users and 10 million monetizable streaming users – a serious goal.

Current investors may be worried about the flood of new shares stemming from TMTG's planned Private Investment in Public Equity (PIPE) deal. This deal would sell shares to primarily hedge funds who pony up a combined $1 billion to provide working capital for the new social media company. The catch is that in most cases the shares will be sold at a 40% discount to the current market price, and the PIPE investors are allowed to then immediately sell them to retail investors at the market price once the merger is complete. This may, of course, cause a sell-off in anticipation of the flood of new shares on the market.

Digital World Acquisition Corp (DWAC) Stock Forecast: closing above 20-day is positive sign

With DWAC stock closing above the 20-day moving average, investors can be forgiven for being optimistic. The 20-day moving average is still above the 9-day, because the all-time high of $175 all the way back on October 22 has led to a steady downtrend for the past month and a half. 

Bulls may want to wait until DWAC shares close above $60. This area up to $65 saw a lot of steady resistance in early to mid-November. Closing above $65 is the especially bullish signal. Additionally, waiting for the 9-day to cross above the 20-day moving average is another signal to hold out for. This will ensure that DWAC's current share price is not just forming another lower high. Support is at $38.

FXStreet View: Wait for the PIPE deal to be completed. These deals have a tendency to crush the share price, and any new news may engender a downswing in DWAC price action.

DWAC 1-day chart