Investors piled back into stocks tied to former President Donald Trump after Elon Musk abandoned his planned purchase of Twitter Inc.
Shares of Digital World Acquisition Corp., the special purpose acquisition company merging with Trump’s media venture, soared as much as 26% to $30.90 on Monday. Warrants tied to the SPAC spiked as much as 60%, while Phunware Inc., a software company that worked on Trump’s re-election campaign, jumped as much as 26%.
The rally came after Musk said he was pulling the plug on his agreement to buy Twitter, a move that would ease some investor fears that a Musk-run operation could spell the end of Trump’s Truth Social. Devin Nunes, chief executive officer of Trump Media & Technology Group, which owns Truth Social, told Fox Business in April that Twitter wasn’t seen as a threat to the company’s ambitions.
Digital World has been a favorite stock to trade among the retail crowd since the planned merger with Trump Media was announced last year. While shares have roughly tripled since their debut in September, they’ve wiped out 83% of their value from an intraday high in October as concerns surrounding investigations from the Justice Department and the US Securities and Exchange Commission threaten to delay or prevent the deal.
“Retail guys are going to be all over this and could push it higher,” Matthew Tuttle, chief executive and chief investment officer at Tuttle Capital Management, said in an email, noting the initial stock rallies Monday look like an overdone retail overreaction. “Unless you are VERY nimble, it would be tough to try to play from the long side.”
Retail traders were actively discussing and buying Digital World in Monday’s session. The company’s ticker was trending on Stocktwits and was among the 15 most bought assets on Fidelity’s platform.
Also joining the rally on Monday, CF Acquisition Corp. VI, a SPAC taking video platform Rumble Inc. public, rose as much as 2.7%. Rumble has a technology and cloud services pact with Trump Media.
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