Digital World Acquisition Corp (NASDAQ:DWAC) stock is rising today on anticipation of its merger delay vote. Today is the first trading day of October. In one week, shareholders will vote to delay the merger. This is the first real growth DWAC has seen in weeks. It’s been a highly turbulent quarter for the special purpose acquisition company (SPAC) partner of the Trump Media and Technology Group (TMTG). Despite this morning’s recent surge, it has still shed almost 70% of its value over the past six months. While DWAC stock initially rose this morning, it quickly lost momentum and dipped again. As of this writing, it is up 6% for the day but has been volatile throughout the past hour.
Much of the recent turbulence has centered around the company’s quest to delay the merger with TMTG. So far, the company has only succeeded in pushing the shareholder vote date back. While this cycle has helped push shares up, it doesn’t seem to be inspiring real investor confidence.
Recently, DWAC stock fell as the company tried to negotiate with its private investment in public equity (PIPE) investors who made it clear they are willing to walk away if they don’t receive a more favorable deal. Now, DWAC CEO Patrick Orlando has resorted to playing one of the only cards he still holds — urging former President Donald Trump to get involved.
What’s Happening With DWAC Stock
On Sept. 30, Orlando took to Truth Social to elevate his message. He reshared a previous post with a link to the merger’s definitive proxy statement filing with the message “let’s get the vote awareness up.” Both Trump and TMTG CEO Devin Nunes were tagged in the post. While this news is likely not the driving factor behind DWAC’s recent rise, it may be helping drive momentum for the upcoming shareholder vote, scheduled for Oct. 10. The former president has issued no statement on the merger so far, nor did he share the post. According to CNBC, no one from TMTG responded to issue a statement.
It’s clear that Orlando only approached Trump about trying to influence the shareholder vote as a last resort. What investors should take from this news is that the CEO is nervous. Orlando needs shareholders to vote in favor of delaying the merger. If they do, two possible scenarios are likely. Either DWAC will find a way to back out of the deal or it will wait to merge with the TMTG until the controversy surrounding the company has cleared and the deal has once again become profitable.
Given everything that we’ve seen from Truth Social, the second option doesn’t seem likely. Truth Social has proven that it just doesn’t have the large-scale appeal that Trump promised. He’s started using the platform regularly, but it hasn’t helped it compete with Twitter (NYSE:TWTR). Even his close relatives barely use it, according to reports, preferring to use the latter.
The Bottom Line
This deal didn’t start falling apart this week but it only seems to be unraveling further. Many large-scale investors who initially helped make the deal possible are now questioning if Trump’s endeavor has fallen too far. As Politico reports, “The hedge funds, trading firms and other major backers are questioning whether the financial riches that first attracted them to the transaction are to hold their interest in a deal fraught with troubles.”
The rise that Wall Street saw from DWAC stock today isn’t likely to change anything. Investors are already convinced that it isn’t a profitable deal anymore. And Orlando’s desperate plea to Trump suggests that even he is weary of closing a deal with TMTG too soon.
On the date of publication, Samuel O’Brient 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.