Shares dive in blank-check company linked to Trump social venture
(Reuters) – Shares in Digital World Acquisition Corp, the blank-check company that plans to publicly list former President Donald Trump's new social media venture, lost almost a third of their value on Tuesday, a second straight daily decline after a steep rally last week.
The stock closed down 29.6% at $59.07 with its price swinging wildly between $55.50 and $91.35 during the session. The pullback followed a 845% rally last week after the company was linked publicly to Trump for the first time.
Market specialists have compared the trading in Digital World's shares to this year's meme-stock frenzy, when individual investors piled into stocks such as GameStop and AMC Entertainment, spurring bouts of intense volatility.
"It's a function of very easy monetary policy and a market that's awash with liquidity. Whether its AMC or a SPAC of your choice, traders are just chasing stuff," aid Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.
Referring to Digital World Acquisition he said:"There's no fundamental reason to own it at this point. There's the emotional reason."
On Friday DWAC had risen 107% to close at $94.20 after hitting a session high of $175 following a 356.8% gain in the previous day's session.
It fell 11% on Monday, the same day that short-seller Iceberg Research said it was betting against the company.
On Tuesday just under 40 million shares changed hands in DWAC, higher than the company's 22.8 million free float, but well below trading volume of 498.8 million on Thursday last week, the stock's peak volume session so far, according to Refinitiv.
Other stocks linked to the former Republican president also tumbled on Tuesday. Shares of Phunware, a company hired by Trump's 2020 Presidential reelection campaign to build a phone app, were recently down 39.2% at $4.35 after it filed for a $48.5 million at-the-market (ATM) equity program.
On Friday, the stock soared nearly 1,500% to $24.04 before finishing session up 471% at $8.74.
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