La futura red social de Donald Trump explota en Wall Street

The company that will allow the social network of Donald Trump go public explodes in Wall Street, a success that illustrates both the speculative fever and the popularity of the former president.

After being suspended several times on Friday amid impressive escalation and volatility, Digital World Acquisition Corp’s stock was up 118% mid-day to $ 98.97.

Its price rose 200% this Friday after having climbed a whopping 357% at the end of Thursday.

Based on the most recent prices per share, the market capitalization of this group with no activity yet reaches US $ 3.2 billion. This is an impressive figure for a new, unfamiliar, and no-business company.

Digital World Acquisition Corp, which is traded under the symbol DWAC on the Nasdaq, is a special purpose acquisition company or SPAC in English: these types of companies are simple shells that are listed on the stock market and then merge with a company to which They provide funds that they raised upon entering the market through the initial sale of shares.

These financial vehicles are a popular way to go public, easier, faster, and cheaper than the traditional IPO (public offering for the sale of shares) that gained momentum in the western markets for two years.

In the last 12 months, some 350 SPACs were created on Wall Street that raised more than US $ 107,000 million, according to the consulting firm Dealogics. When it entered the Nasdaq in September, DWAC raised $ 293 million.

It turned out that the company with which it will merge is the new media and technology group founded by Trump in February in Delaware, which will be in charge of the social network project of the millionaire former Republican president.

“Truth Social” is the name of the new future platform that is presented as an alternative to Facebook, Twitter and YouTube, which prevent you from having accounts because they believe that Trump incited his supporters to violence before the invasion of the Capitol on 6 January.

In a statement released Wednesday to announce the merger with DWAC, Trump said he seeks to “resist the tyranny of the tech giants” and was outraged that he had been “silenced.”

“Sign of the times”

This frenzy illustrates investors’ appetite for the Republican millionaire’s project.

DWAC is one of the most cited terms in the WallStreetBets forum of the Reddit site, which brings together 11 million small investors who are adept at high-risk positions on the stock market.

This explosive rise of DWAC is reminiscent of Gamestop and other titles that had the same progression at the beginning of the year, driven by purchases from an army of small investors.

But it also appears to be politically motivated by shoppers now that Trump, defeated by Joe Biden in November, continues to be very popular with Republicans.

For Patrick O’Hare, head of market analysis at Briefing.com, the parallelism with the GameStop case is evident, in particular because speculation around these SPACs has been multiplying for some months in the United States.

“They’re money games,” O’Hare sums up. “In a sign of the times. There is no fundamental reason to justify the movements that we observe ”, he summarized.

Trump’s popularity among his supporters could also explain part of DWAC’s advancement.

Trump never officially acknowledged his defeat and hinted that he will seek the presidency again in 2024.