Following Donald Trump's indication that he would run for office again, investors flocked to the stock of Digital World Acquisition Corp., the company that will combine with his social media business.
The special-purpose acquisition business increased by 66%, marking the largest one-day gain since the merger's first burst, as millions of shares were traded. Warrants linked to the SPAC gained 125% to $9.30, while shares of Phunware Inc., a software firm that assisted with Trump's re-election campaign, increased by 38%, and Rumble Inc., a video platform, increased by 3.8%. Rumble claims to have a deal with Trump Media & Technology Group and is "built to be impervious to cancel culture."
The increase in activity for Digital World grew as the day went on, with over 32 million shares changing hands—nearly 33 times the average for the previous month. With calls with a strike price of $30 and expiring on November 11 and November 18, these were the most frequently traded options, with put volume outpacing call volume by more than a 2:1 ratio.
Following Donald Trump's indication that he would run for office again, investors flocked to the stock of Digital World Acquisition Corp., the company that will combine with his social media business.
As the SPAC's sponsors struggle to mobilize its mostly retail trading base to vote on a postponement of the deadline for its merger with Trump Media & Technology Group, Digital World has been unsteady. Through Friday's close, shares were down 70% from a year ago due to sluggish demand for Truth Social and as investors considered how Elon Musk's acquisition of Twitter Inc. may effect the company's future.
Since the partnership was announced in the previous year, the stock has been popular among retail traders. Despite a slowdown in their purchasing, they have helped the SPAC to outperform others of its sort. It now trades at a price that is more than 185% more than what holders of the $10.20 it would be worth if the sale falls through.
Matthew Tuttle, CEO of Tuttle Capital Management, asserted that "any Trump news will raise interest." "If Trump wins the presidency again, DWAC may benefit, at least temporarily. In the long run, one must consider that something connected to DWAC may be low-hanging fruit if his opponents are out to harm him.
On Monday, retail merchants were engaged in a lively discussion on Digital World. On Stocktwits, its ticker was trending, and Reddit's WallStreetBets forum had more mentions of it than Tesla Inc., which is a favorite among retail traders. Despite the pitches, trading among Fidelity clients was limited, with purchase orders just beating out sell orders.
Short covering, in which investors liquidate part of their losing bets as shares increase, may potentially be contributing to the surge. According to statistics from S3 Partners, about 13% of Digital World shares that are currently on the market are being sold short.