Digital World Acquisition Corp (DWAC) could crash to $10 as deal with Trump Media unlikely to be extended
- Merger between DWAC and Trump Media & Technology Group on the rocks.
- 1-year extension of merger requires 65% affirmation vote from shareholders.
- DWAC still under investigation by the SEC.
You heard it hear first, folks. Digital World Acquisition Corp (DWAC) shares might soon trade more than 50% lower at $10. That is because $10 was the initial price that shares traded at before DWAC announced its merger with the Trump Media & Technology Group (TMTG). The whole reason DWAC has traded much higher than $10 over the past year is that it was slated to merge with TMTG, the owner of Donald Trump's TRUTH Social app, a sort of social media substitute for the MAGA world.
That deal looks to be in limbo however. Reuters is reporting that the largely retail base of investors in DWAC have not voted on their proxy statements to extend the merger agreement by one year. The extension is necessary as the Securities & Exchange Commission is continuing to review the merger and is looking into whether the merger was agreed to prior to DWAC's formation. If so, executives at DWAC would be in serious legal jeopardy.
DWAC shares are down more than 21% in Tuesday's premarkat at $19.25.
DWAC needs 65% of shareholders to approve the merger extension, but a Reuters source told the news outlet that as of Monday night they were no where close to that figure. Digital World officials are scheduled to announce the vote results on September 6.
DWAC stock forecast
If the extension fails to get approval, then the chart below serves little point. DWAC is trading at $19.25 in the premarket, well below the low from June 30 at $22. A list minute extension approval would however mean that shares would at least spike to resistance at $32 to $33.
DWAC daily chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
