After Elon Musk disclosed that he had decided to refrain from buying Twitter (NYSE:TWTR), Digital World Acquisition (NASDAQ:DWAC) stock is rallying 16% in pre-market trading. DWAC stock is a special-purpose acquisition company (SPAC) that has agreed to merge with the Trump Media and Technology Group, or TMTG. TMTG is a social media company founded by former U.S. President Donald Trump.
TMTG officially launched Truth Social in February, a social media website that has touted its commitment to the principle of free speech.
Elon Musk and Twitter
Tesla (NASDAQ:TSLA) CEO Elon Musk, who had agreed in April to buy Twitter for $44 billion, indicated that, if he took over the platform, he would refrain as much as possible from deleting content from the website. Since Musk, like Trump, was seeking to attract users who claim to adhere to principles of free-speech, Musk’s decision to refrain from buying Twitter is being seen as positive for Truth Social and DWAC stock.
On July 8, Musk disclosed in an Securities and Exchange Commission (SEC) filing that he would not abide by his deal to buy Twitter because he has doubts about the accuracy of the company’s data on “spam and fake accounts.” Musk also accused the platform of withholding important “data and information” from him.
Twitter disputes these claims and is expected to sue Musk over his decision to terminate the deal.
DWAC Stock and TMTG’s Subpoenas
Earlier this month, TMTG “received subpoenas from both a federal grand jury and securities regulators,” while Digital World was served with a subpoena by the grand jury. The SEC has been probing whether Digital World and TMTG held illegal meetings before Digital World launched its initial public offering (IPO).
DWAC stock had dropped sharply in recent weeks, falling from $30.13 on June 15 to $23.22 on July 6.
PHUN Stock Is Also Soaring
The shares of Phunware (NASDAQ:PHUN) are also soaring in pre-market trading today. Phunware, which markets software utilized to target consumers online, worked with Trump’s 2020 reelection campaign. Thus, it has consequently been seen by some as being linked to Truth Social.
Although, as InvestorPlace contributor Ian Bezek has pointed out, the connection between Truth Social and Phunware is only based upon “vague rumors.”
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On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.