Digital World Acquisition Corp, which signed an $875 million deal in October to merge with Trump Media & Technology Group Corp (TMTG), is currently the best-performing SPAC stock, according to SPAC Research.
op 10 SPACs pre-closing and post-closing) by the current share price (in $):
For an interactive graphic, click here: https://tmsnrt.rs/3qLAAtJ
Digital World shares ended trading at $73.12 on Friday, well above their initial public offering price of $10. This implies a valuation of the combined entity of nearly $13 billion, including debt.
This is despite the fact that TMTG has yet to roll out its social media app and the operation carries regulatory risks. Last month, Democratic Sen. Elizabeth Warren asked Securities and Exchange Commission (SEC) Chairman Gary Gensler to investigate the proposed merger for possible disclosure violations of securities laws.
The SEC would not say whether it would take action. Digital World revealed last month that it had received inquiries from the SEC and the Financial Industry Regulatory Authority (FINRA), without providing details on their nature.
The financial underperformance of most SPACs makes Digital World’s stock market rally, driven by Trump supporters and retail investors, all the more remarkable.
In addition, DWAC’s stock performance pushed up the average share price of all 114 SPACs that have announced deals that have not yet closed. Excluding DWAC, the SPAC average is currently trading at $9.88 per share, which is lower than the average trust value of around $10.05, according to SPAC Research.
According to University of Florida professor Jay Ritter, SPACs have underperformed the market by an average of 25% over the past decade. The optimistic financial projections for many of these operations have not materialized.
“SPACS continued to yield negative average returns in a rising market. This trend continued into 2021,” Ritter said.
If regulators let the deal go through, Digital World shareholders are almost certain to vote in favor, given the stock’s performance. Digital World plans to release a proxy statement with details of the deal in February, setting the stage for the vote to take place in the following weeks, according to people familiar with the matter.
Apple Inc.’s App Store currently lists February 21 as the date Trump’s new social media app, Truth Social, will be available for download.
Digital World CEO Patrick Orlando and other SPAC insiders paid $11.8 million to receive founder and investment stakes in SPAC, which are now worth about $620 million, according to reports. regulatory filings and Reuters calculations.
p 10 SPACs pre-closing and post-closing) by current stock price (in $) https://tmsnrt.rs/3qLAAtJ
p 10 SPACs pre-closing and post-closing) by current stock price (in $) https://tmsnrt.rs/3KFJsZV