Digital World Acquisition (NASDAQ:DWAC), the special purpose acquisition company (SPAC) aiming to take former President Donald Trump’s Truth Social public, may not close the deal within its two-year time limit. Investors have until Aug. 12 to vote on a proposal for extending the deadline to Sept. 8, 2023.
The execution of a search warrant at Trump’s Mar-a-Lago mansion is likely to further complicate the timeline. DWAC stock fell almost 2% on Aug. 8, after the announcement of a delay, and another 3% overnight. It opened this morning at $30 per share.
Nothing But Truth
Since the announcement of Truth Social, other conservative-oriented social sites have evolved, like Parler, founded in 2018, and Gab, founded in 2016.
DWAC proposed to merge with Trump’s Trump Media and Technology Group (TMTG) last October. The U.S. Securities and Exchange Commission (SEC) began investigating the transaction in December. The charge is that the merger was arranged before DWAC’s own initial public offering (IPO), which would violate regulations.
DWAC board members have since been served subpoenas concerning their communications with Rocket One Capital, a private equity firm in Miami whose CEO is Michael Schvartsman. No allegations have been made against Rocket.
Before the announcement, DWAC stock was trading higher. This came after Elon Musk said he wouldn’t buy Twitter. Investors seemed to conclude that a Musk-led Twitter would create more competition.
DWAC Stock: What Happens Now?
In addition to its legal issues, DWAC has been hurt by technology issues, the departure of key executives and slow growth. Parler, which is privately held and was shut down after the events of Jan. 6, has since come back online and said it had 1 million active users in January.
It’s possible that, even if the transaction closes, Truth Social will prove too late to its market opportunity. If DWAC doesn’t close a transaction, investors will be due $10 per share, just one-third of its Aug. 9 price.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.