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Trading in Stock Tied to Trump's New Social Venture Halted at Least 12 Times as Price Soars

Newsweek logo Newsweek 10/22/2021 Alyse Messmer
Digital World Acquisition Corp., the company planning to merge with Trump Media & Technology group had such rampant stock trading Friday morning that it was halted at least 12 times. The New York Stock exchange on October 19, 2021 in New York. © Spencer Platt/Getty Images Digital World Acquisition Corp., the company planning to merge with Trump Media & Technology group had such rampant stock trading Friday morning that it was halted at least 12 times. The New York Stock exchange on October 19, 2021 in New York.

Digital World Acquisition Corp., the company planning to merge with Trump Media & Technology group, had such rampant stock trading Friday morning that it was halted at least 12 times.

Thursday when the company announced its plans with President Donald Trump's new media venture, the stock more than quadrupled.

The stock nearly tripled during its first minute of trading on Friday but was temporarily halted. In the morning it was up to $175, and at noon was at a 93.3 percent gain at $88.78.

The high-paced stock market dives are taking place before investors have seen a proxy statement that will include more details on the merger and how the new venture will operate. Few details have been released, but the surge in price shows confidence in the new merger.

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Trump Media & Technology aims to challenge Facebook, Twitter, and Disney video streaming services.

For more reporting from the Associated Press, see below.

Some investors appear to be believers in Trump's ideology, while others see a chance for the company to quickly gain a big audience. A big chunk of investors, though, appeared simply to be grabbing a chance for a quick buck.

Several threads on Reddit's WallStreetBets forum, where millions of traders share their successes and failures, had users bragging about how much money they made by jumping in and out of Digital World Acquisition Corp. Others were asking if they should listen to the fear they were feeling of missing out.

Digital World Acquisition is a special-purpose acquisition company, something that's typically called a SPAC or "blank-check" company. It's sitting on a little less than $300 million of cash that it raised in its own initial public offering before it went looking for a company to acquire.

SPACs can offer privately held companies a quicker and easier way to get their stocks on an exchange, by merging with them. They were wildly popular earlier this year, but activity had been receding as regulatory scrutiny on them and interest in them dimmed, at least until Wednesday's Trump-related announcement.

Ít can be difficult for skeptical investors to bet that a SPAC's price will fall, a move called "shorting," said Michael Ohlrogge, an assistant professor of law at New York University who has researched SPACs. With few short-sellers, that can remove a force pushing a stock's price down, allowing it to jump even higher than it would otherwise.

"Overall, I think it's a big difficulty because it leads to their prices being inflated," Ohlrogge said.

The last time Trump ran a publicly traded company, it didn't end up well for investors. His casino company, Trump Entertainment Resorts, lost hundreds of millions of dollars over more than a dozen years and filed for bankruptcy several times, socking shareholders with big losses. Trump fared better. He took in $82 million in fees, salary and bonuses over the same period, according to Fortune magazine.

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