FILE PHOTO: Former U.S. President Donald Trump speaks during a rally at the Iowa States Fairgrounds in Des Moines, Iowa, U.S., October 9, 2021. REUTERS/Rachel Mummey
October 25, 2021
(Reuters) – Shares of the blank-check acquisition company that plans to publicly list former U.S. President Donald Trump’s new social media venture fell on Monday after an eye-watering rally last week, as a short-seller said it was betting against the company.
Digital World Acquisition, a Miami-based special purpose acquisition company (SPAC), fell 10.98%, its first declining session since announcing Wednesday it would merge with Trump’s media company to create a social media app called TRUTH Social.
The stock surged following the announcement and remains up over 700% since the deal was unveiled.
Earlier on Monday, short seller Iceberg Research tweeted https://twitter.com/IcebergResear/status/1452699920641650690 it was betting against the company’s shares.
“We are short $DWAC. Now that initial excitement has passed, we see only risks for investors in near future. Based on Trump’s track record, at current price, renegotiation is likely to keep more of the merged company for him,” Iceberg Research tweeted.
Iceberg, which publishes a blog with its research on WordPress, gained attention in 2015 for highlighting what it called aggressive accounting practices at Hong Kong-based commodities trader Noble Group. Noble denied the allegations but subsequently saw its profits collapse and was forced to sell most of its assets.
The company said earlier this year that it was short popular meme stock AMC Entertainment Holdings.
Digital World Acquisition’s recent surge is reminiscent of the meme stock frenzy earlier in 2021, when an army of retail investors on Reddit fueled hyper-rallies in GameStop Corp, AMC Entertainment Holdings and other stocks.
Twitter, Facebook and other social media platforms banned Trump from their services after hundreds of his supporters rioted at the U.S. Capitol on Jan. 6.
TRUTH Social is set for a beta launch next month and full rollout in the first quarter of 2022.
SPACs allow private companies to publicly list their shares while sidestepping traditional initial public offerings.
(Reporting by Noel Randewich; Editing by Ira Iosebashvili and Chris Reese)
Source: One America News Network
