The clock has officially started ticking for Digital World Acquisition Corp (NASDAQ:DWAC). The special purpose acquisition company (SPAC) partner of the Trump Media & Technology Group (TMTG) has been trending downward for months amid high volatility. Thanks to its close ties to Donald Trump, DWAC stock has seen enough quick surges to keep it safely above penny stock status but not enough to generate any actual growth. This is partially due to the company’s consistent failure to close its merger, which has understandably shaken investor confidence.
According to a 10K filing, though, DWAC’s day of reckoning is quickly approaching. If the company fails to merge with TMTG by Sept. 8, 2023, it will be the end of the line.
Does this mean that the Trump SPAC deal is on the verge of falling apart for good? Let’s take a look at this development and assess what investors should be expecting.
What’s Happening With DWAC Stock
After a quick pop into the green earlier this week, DWAC stock is back in the red today. As of this writing, it has been trending downward all day, falling 2.5%. While news of Trump’s indictment pushed it up in late March, it came down as quickly as it rose. However, as InvestorPlace reported, this didn’t mean the stock would turn around and start rising. Its performance since then has proven this, with DWAC stock falling 5% for the month.
There are plenty of reasons to bet against DWAC stock that do not involve the merger. The company has a long history of regulatory probes and executive turnover. That doesn’t even touch on the instability that comes with being linked to Trump, who is currently facing numerous legal battles that could diminish his political prospects. But now that the deal itself is facing a looming deadline, investors have more cause than ever to be nervous. Per the 10K:
“On November 22, 2022, the Company held a special meeting of stockholders. At the meeting, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Extension Amendment”) extending, upon the request of the Sponsor and approval by the Board, the period of time for the Company to consummate an initial business combination up to four times, each by an additional three months, for an aggregate of 12 additional months (which is from September 8, 2022 up to September 8, 2023).”
That’s 135 days from now, and DWAC doesn’t have a history of promptly meeting deadlines and conducting itself professionally. The ticking clock that overlooks the company might be more aptly described as a countdown to destruction. If the company is forced to wind down operations, any money it has left will be returned to investors. But for shareholders, it will mean the culmination of DWAC’s long, slow train of self-destruction.
What Comes Next?
Over the next few months, DWAC stock will likely struggle as the company works hard to close the merger. Unfortunately for investors, the firm’s track record is against it. Trump may have co-authored The Art of the Deal, but his company cannot seem to reach one with its SPAC partner. Unless the company pulls off a miracle, DWAC stock will continue its race to the bottom, as InvestorPlace contributor Will Ashworth predicts. There’s no reason to bet on the company, but far too many to bet against it.
On the date of publication, Samuel O’Brient did not hold (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.