The Digital World Acquisition Corp (NASDAQ: DWAC) stock price was trading down 8.22% premarket, undoing some of the gains made on Friday last week when the stock rallied 50.30% despite a lack of news. The lack of news means DWAC’s rally was driven by investor sentiment.
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The last significant announcements from DWAC included the arrest of three men charged with insider trading of its shares ahead of the proposed merger of its stock and that of Trump Media and Technology Group (TMTG) in October 2021. The three men were Michael Shvartsman, Gerald Shvartsman and Bruce Garelick.
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The US Justice Department accused the three men of trading DWAC shares based on nonpublic information as they bought the company’s stock in the days leading up to the announcement before selling their shares for a $22 million profit barely two days after the proposed merger was announced.
It's been almost two years, and the merger between DWAC and TMTG is far from done. It is still unclear what triggered Friday’s surge higher in DWAC stock. Still, it most likely renewed investor interest in the stock amid hopes that the merger with TMTG would advance, creating a powerful media company.
The rally higher in DWAC stock seen on Friday could also be a short squeeze by retail investors keen to stick it up to the institutional traders who are betting that the TMTG and DWAC merger will be scrapped, causing DWAC shares to fall significantly in the aftermath of the same.
Other recent news from DWAC was that it had reached a settlement in principle with the US Securities and Exchange Commission (SEC). The settlement details are yet to be finalised and must be approved by the commission.
However, If the deal is approved, the SEC will enter a cease-and-desist order with the company, finding DWAC violated “antifraud provisions” connected to initial public offering filings. The settlement between the SEC and DWAC did not involve TMTG, which could use the same as an excuse to abandon the merger deal.
*This is not investment advice.
Digital World (DWAC) stock price.
The Digital World (DWAC) stock price was trading down 8.22% at $18.42, erasing some of Friday’s gains.
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