Trump-backed SPAC plunges

Shares in Digital World Acquisition Corp sank by as much as 26% on Tuesday

Digital World Acquisition Corp, the special-purpose acquisition company that is set to merge with former US president Donald Trump’s media company and take it public, plunged by as much as 26% on Tuesday. 

Shares in DWAC surged by as much as 1,600% last week after the former ‘leader of the free world’ announced a deal to list Trump Media & Technology Group (TMTG) via a SPAC merger. 

Already listed on the Nasdaq, the DWAC is a ”blank check company”, existing purely to merge with private companies in order to take them public. 

Having regularly lambasted traditional media outlets in the United States as “fake news” during his presidency, many expected that Trump would launch a news channel of his own. 

TMTG+ & TRUTH Social

Although TMTG will launch a subscription video-on-demand service (TMTG+) featuring news, podcasts and what it describes as “non-woke” entertainment programming, the former Republican leader’s primary challenge is to another of his self-declared enemies, Big Tech. 

In an effort to “fight back against the ‘Big Tech’ Companies of Silicon Valley” which the company says have “used their unilateral power to silence opposing voices in America”, TMTG will launch a social network called TRUTH Social. 

Trump’s statement

Trump, who was removed from Twitter and Facebook shortly before leaving office and has continued to dispute the outcome of the 2020 election, stated:

“We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable. I am excited to send out my first TRUTH on TRUTH Social very soon. TMTG was founded with a mission to give a voice to all. I'm excited to soon begin sharing my thoughts on TRUTH Social and to fight back against Big Tech. Everyone asks me why doesn’t someone stand up to Big Tech? Well, we will be soon!”

Market correction

Although the prospect of an alternative social media firm backed by one of the most well-known people on Earth attracted a flurry of investors last week, this week has witnessed a sizeable correction. 

In addition to a desire to cash in on a rapid potentially unsustainable rise, part of the sell-off centres on anxiety about TMTG+’s subscription model. 

Such a model has been successful for major public companies with long track records, such as Disney, Apple and Amazon. However, some doubt that the soon-to-be-public TMTG will be able to pull off such a feat and attract paying customers. 

By 11:30 (EDT), Digital World Acquisistion Corp traded down by 20.1% at $67.00, down 44.6% since the start of the week.

Further reading: Facebook stock forecast: is the bullish trend over?

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