Donald Trumps new social media SPAC, explained

Shares fell during pre-market trading and they haven’t rebounded. As of this writing, the stock is down 2% for the day amid a fair amount of volatility. He is currently facing state charges in New York that his company falsified business records. He was also indicted in federal court last month for allegedly mishandling classified documents.

• Today brings another announcement that has Trump stocks shooting up again.
• That venture will likely create significant opportunity for Rumble and send CFVI stock up even more.
• I was disappointed that there was absolutely no mention of the timing of the S-4 filing or any timing comments on the merger, except that was expected to be completed before the “Outside Date”-September 20, 2022.
• It is interesting to note that they are accruing their expenses instead of recording them as accounts payable, which means various lawyers and others have not actually billed DWAC yet.
• In doing so, they will further the agendas of the democrat and, according to many republicans, their “bad” ideas.

DWAC would have until September 8, 2022, which can be extended up to March 8, 2023 to complete a different merger deal. That does not leave much time to find and negotiate a deal, followed by waiting for their S-4 to become effective. So the longer the wait for S-4 filing for the Trump merger deal, the less likely there will be any deal, which could mean the eventual liquidation of DWAC at about $10 per share. DWAC is a special purpose acquisition company, or SPAC, that announced plans to merge with Truth Social parent company Trump Media & Technology Group in October 2021. The little-known acquisition company behind the merger become the most actively traded stock on Fidelity’s trading platform today, and according to CNBC, was among the most popular stocks discussed on popular digital investment forum r/WallStreetBets. The Direct Registration System (also known as “DRS”) is a system for book-entry ownership.

Why would Trump do this?

DRS offers investors and shareholders an alternative to receiving a physical certificate, by allowing the shares to be record, held and transferred electronically on the books of the company or its transfer agent. The Depository Trust Company (“DTC”) offers a service to transfer agents known as the Direct Registration System (“DRS”). DRS allows transfer agents to provide shareholders with the ability to hold their shares in book-entry form with the transfer agent instead of a physical stock certificate. Donald Trump is perhaps the US President best known for his social media usage. However, after the riot in the US Capitol on January 6th, 2021, many major platforms banned his accounts, Twitter being the widest known instance of this.

Last week brought a serious strike against Trump when a state Supreme Court judge ruled that he and his sons had committed fraud. According to NPR, that puts the family’s business empire at significant risk. Today brings another announcement that has Trump stocks shooting up again. Authorities in Georgia are also investigating Trump, the frontrunner for the 2024 Republican nomination, over his attempts to overturn his loss in the 2020 presidential election. I have to also imagine that there’s an element of financial gamesmanship here. He’s pushed banks to grant him risky loans, and when those loans went bad, he’d go to extreme lengths to put them off — like when he sued Deutsche Bank and claimed he shouldn’t pay them back because they helped cause the Great Recession.

The update comes after DWAC earlier last month confirmed that shareholders voted to approve an extension for its deal to merge with Trump’s media company by a year. “We’re excited to announce this amendment to our Merger Agreement with TMTG, reinforcing our shared vision and commitment to advancing Truth Social,” Eric Swider, CEO of DWAC, said in the statement. “This revised agreement is expected to allow us the necessary time to work diligently towards our joint objective.” This article was only intended to cover their 10-K filing and was not intended to cover other recent events, such as reports that Fox News was joining Truth Social. There was a “relief” rally in DWAC stock because of two critical issues. DWAC’s SEC settlement dictates that the company must pay an $18 million civil penalty fee if it merges with TMTG and takes the company public.

DWAC and TMTG continue moving forward expeditiously toward their shared objective of completing a business combination in the coming months. The Third Amendment extends the period of time for the parties to complete mutual supplemental due diligence ahead of DWAC’s anticipated filing of an updated registration statement on Form S-4 with the Securities and Exchange Commission (the “SEC”). For further information on the Third Amendment, please see DWAC’s current report on Form 8-K filed with the SEC on September 29, 2023. Initial capital to fund TMTG’s startup will come from a merger agreement with DWAC, which is expected to occur in the first quarter of 2022.

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On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this cbs viacom merger article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. What else should investors know as Wall Street braces for a company controlled by Trump?

O’Brient loves helping everyone understand the complexities of economics. Will Trump opt to use the self-destruct button that he now has at his disposal? But then again, Trump’s history of making poor business decisions speaks for itself. The more likely scenario would be that Digital World’s leadership will opt to terminate the deal and return all remaining funds to its investors. Of course, if this deal doesn’t work out, it wouldn’t be the first time that Trump has left other people — including his supporters — holding the bag. There is a seemingly never-ending list of companies opting to make their market debuts through SPAC mergers.

Wait, what’s a SPAC?

It is essentially a pot of money raised from investors with the intention of finding a private company to buy. In this case, DWAC completed its initial public offering in September when it started trading under the ticker DWAC. In late October, Trump Media & Technology Group, former President Donald Trump’s new digital-media venture, said it would combine with DWAC. If those existing SPAC shareholders leave — as they are kind of financially incentivized to do — then regular people buying the stock could wind up owning shares of a company that’s less valuable than promised. CNBC recently determined that 97 percent of SPACs that have not yet completed a merger are trading below their initial $10 share price.

TMTG’s initial growth will be funded with DWAC’s cash held in a trust account of $293 million, assuming no redemptions and DWAC stockholder approval. According to a TMTG press release, the transaction with DWAC places TMTG at an “enterprise value of $875 million” and a “cumulative valuation of up to $1.7 billion, depending on the performance of the stock price, post-business combination.” Digital World Acquisition Corp. is a special-purpose acquisition company, or SPAC.

You may sell your shares through the DRS Sales Facility, administered by Computershare Trust Company, N.A. The types of sale orders available may be different for each company. You may diamond pattern trading go online at /investor or call Computershare to find out what order types are available. While not typically a concern of investors, there are several requirements for the DWAC.

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Lee Jacobson was an executive at Midway Games and Atari and also ran a mobile games analytics company that went bankrupt in 2019. Bruce Garelick is a hedge fund guy who describes himself as a “disruptive technology investing enthusiast” in DWAC’s SEC filings; he went to Wharton — Trump’s alma mater. Brian Shevland is a portfolio manager who also went to Wharton. Rodrigo Veloso created a bottled water company that actually succeeded. It was started by a man named Patrick Orlando, who has been an investment banker and ran a sugar trading company. The SPAC’s chief financial officer is Luis Orleans-Braganza — a serial entrepreneur who is also a current member of Brazil’s National Congress, was a member of Jair Bolsonaro’s former party, and the son of the heir to Brazil’s defunct throne.

But if the merger does not occur before the Jan. 1, 2025, deadline, and if DWAC returns investors’ money, the SEC has agreed to waive the penalty. A warrant is exercised once the holder tells the issuer they intend to purchase the underlying stock. When a warrant is exercised, the company issues new shares of stock, so the overall number of outstanding index trading shares will increase. The exercise price is fixed shortly after issuance of the bond. If you would like to sell shares you already hold, you can use Investor Trade, Computershare’s online share sale facility for issuer sponsored securityholdings. The service is available to investors in companies where Computershare acts as share registrar.

Investors thinking of buying shares of DWAC should keep in mind that its structure as a SPAC exposes it to some unique risks as compared to traditional equity investments. For example, one disadvantage of investing in a SPAC like DWAC is that investors often have limited information on the operations and financials of the target acquisition company. The DWAC is one of two ways of transferring between broker/dealers and the DTC, the other being the Direct Registry System (DRS) method. Both enable investors to hold securities in registered form on the books of the transfer agent, rather than in physical form. DRS is different from DWAC in that shares in DRS have already been issued and are held electronically on the books of the transfer agent. Digital World Acquisition Corp is a special purpose acquisition company (SPAC) who itself has no business operations and whose purpose is to raise capital that can be acquired by another entity through a merger.

This means that a company that’s merging gets the SPAC money plus some more money from outside investors. In return for that money, the outside investors get a chunk of the new company. The existing directors (or nominees to be directors) who already own shares of the Digital World Acquisition Company SPAC have…

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