Shares in Digital World Acquisition Corp.
DWAC,
+7.15%,
a special-purpose acquisition company that has agreed to merge with a media property being developed by former President Donald Trump, increased more than 24% in after-hours trading Wednesday, after a report that the entity is seeking to raise up to $1 billion. Reuters reported just as markets closed Wednesday that two “people familiar with the matter” say the entity is looking to raise up to $1 billion from hedge funds and others in a private investment tied to the SPAC, known as a PIPE. DWAC shares jumped just before the close Wednesday for a 7.2% daily gain to $44.35, then increased 24.2% in the extended session. DWAC representatives are trying to sell PIPE shares for $30 apiece, which would push the company to a $3 billion valuation, according to the report, which says one source attended a recent “roadshow” seeking to drum up funding for the PIPE. Reuters reported that many Wall Street firms did not attend the roadshows, which were instead largely populated by representatives from hedge funds, family offices and high-net-worth individuals, and that attendees were shown a demonstration of a service called TRUTH Social that resembled Twitter Inc.
TWTR,
-2.55%
A tangentially-related stock, Phunware Inc.
PHUN,
+11.68%,
saw shares jump 40% in after-hours trading.
Tag Archives: DWAC
Trump SPAC DWAC drops in price after big gains on social media news
The social media app will be developed by Trump Media and Technology Group (TMTG).
Rafael Henrique | LightRocket | Getty Images
The SPAC stock linked to Donald Trump’s planned social media platform sharply dropped in price Monday afternoon after booking huge gains last week following news that it would merge with the ex-president’s planned social media company.
Digital World Acquisition Corp. stock was down by 10% just after 2 p.m. ET, trading at below $83 per share.
Earlier in the day, DWAC had been trading about 4% higher before pulling back to hover back and forth on either side of the “unchanged” level at around $94 per share.
That pace was a major change from last week, when DWAC shares skyrocketed from $9.96 apiece at Wednesday’s close to $94.20 per share Friday — a whopping 845% rally in two days.
The so-called special purpose acquisition company also was seeing markedly lower trading volume Monday.
As of the afternoon, more than 55 million shares of DWAC had changed hands, according to FactSet.
Last Thursday, with its price soared more than 350% in a single session, nearly 500 million shares of DWAC were traded. DWAC that day was the most traded name on the consolidated tape of New York Stock Exchange and Nasdaq listings, by far.
In another sign that the Trump-fueled craze had died down, or at least moderated a bit, the share price of the advertising software startup Phunware tumbled 20% on Monday.
Phunware, which was involved with Trump’s 2020 reelection campaign, saw a 470% surge in price on Friday.
There is no indication that DWAC and Phunware have a business relationship. But Phunware’s rise last week coincided with the spike in the SPAC’s stock.
Short-seller Iceberg Research unveiled a bearish position on the DWAC Monday, saying that investors face uncertainties in this blank-check deal as Trump could become a dominant shareholder after the merger.
“Now that initial excitement has passed, we see only risks for investors in near future. Based on Trump’s track record, at current price, renegotiation is likely to keep more of the merged company for him,” Iceberg Research said in a tweet.
“SPAC holders don’t own a piece of this project yet. Trump has leverage, not them.”
DWAC remained a popular chatroom topic among retail traders who were credited last week with turning the SPAC into the latest hot “meme” stock in 2021.
The DWAC ticker was the second most popular name on Reddit’s WallStreetBets chatroom on Monday, only next to Tesla, the electric vehicle giant that hit a $1 trillion market capitalization on the same day, according to alternative data provider Quiver Quantitative.
One trending post on WallStreetBets on Monday said “DWAC- ALL IN,” which attracted more than 500 comments.
SPACs, also known as blank-check companies, are created to raise capital in the public equities markets, with the goal of using the cash to purchase or merge with private firms.
Trump’s new social media company, Trump Media & Technology Group, on Wednesday said it and DWAC had reached an agreement to merge so that the former president’s firm will become a publicly listed company.
Dow Jones Futures: Apple, Microsoft Lead 7 Stocks In Earnings Wave; Will Trump Stock DWAC Keep Rising?
Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally had solid gains last week, with the Dow Jones and S&P 500 hitting record highs. The Nasdaq composite moved closer to record levels despite rising Treasury yields and Friday’s big sell-offs by Intel (INTC) and Snap (SNAP).
X
Earnings season hits full force this coming week, with hundreds of companies reporting. Apple stock, Microsoft (MSFT), Advanced Micro Devices (AMD), General Motors (GM), Upwork (UPWK), ServiceNow (NOW) and Google parent Alphabet (GOOGL) are seven big names on tap that are in or near buy zones.
These names could move markets by themselves, but they can also have a big impact on related stocks, as Snap stock’s impact on digital ad firms such as Google stock showed.
Investors should be ready to take advantage of earnings week. Don’t let earnings week take advantage of you.
Trump SPAC Stock
Meanwhile, expect Donald Trump’s SPAC to remain hotly traded this week. Digital World Acquisition (DWAC) exploded 357% Thursday on news that it would be the SPAC merger partner for Donald Trump’s new social media venture. DWAC stock then shot up 107% to 94.20 on Friday. But it closed far below Friday morning’s peak of 175, though not at session lows.
DWAC stock fell more than 10% in active trading Friday night.
Could DWAC stock go higher? Absolutely. But it could also plunge. Without a proper entry or any fundamentals, buying any meme stocks is fraught with peril. The political dimension potentially could give a Trump stock more staying power, but that thinking presumably helped turbocharge DWAC stock on Thursday and Friday.
Meme stocks can skyrocket, getting everyone’s attention. But on the second day of “everybody talking about it,” more-recent meme stocks have tended to peak.
In the meantime — “meme time? — DWAC stock may be sucking up the oxygen from “traditional” meme stocks such as GameStop (GME) and AMC Entertainment (AMC). Both AMC stock and GME stock fell nearly 7% on Friday as DWAC stock got the attention.
Microsoft, ServiceNow, Google and AMD stock are on IBD Leaderboard. NOW stock is on SwingTrader. MSFT stock, ServiceNow, Google are on IBD Long-Term Leaders. AMD, Google and UPWK stock are on the IBD 50.
Apple (AAPL) and Microsoft stock are on the Dow Jones, S&P 500 and Nasdaq composite, and the only two members of the $2 trillion market-cap club.
The video embedded in this article reviewed the overall market action and discussed a game plan for the coming week. It also analyzed Google, UPWK stock and Cleveland-Cliffs (CLF).
Time The Market With IBD’s ETF Market Strategy
Dow Jones Futures Today
Dow Jones futures open for trading at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Coronavirus News
Coronavirus cases worldwide reached 243.70 million. Covid-19 deaths topped 4.95 million.
Coronavirus cases in the U.S. have hit 46.25 million, with deaths above 755,000.
Stock Market Rally
The stock market rally had a solid performance last week. The Dow Jones Industrial Average rose 1.1% in last week’s stock market trading. The S&P 500 index climbed 1.65%. The Nasdaq composite gained 1.3%. The small-cap Russell 2000 advanced nearly 1%.
The 10-year Treasury yield rose 8 basis points to 1.655%, hitting five-month highs.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) popped 1.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) stepped up 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 2.2%, with Microsoft stock and ServiceNow major holdings. Snap stock also is an IGV component. The VanEck Vectors Semiconductor ETF (SMH) rose 1.7%. AMD stock is a key SMH component.
SPDR S&P Metals & Mining ETF (XME) dipped 0.6% and Global X U.S. Infrastructure Development ETF (PAVE) gained 2.3%. U.S. Global Jets ETF (JETS) tumbled 4.2%. SPDR S&P Homebuilders ETF (XHB) rallied 3.35%. The Energy Select SPDR ETF (XLE) moved up 1.1% and the Financial Select SPDR ETF (XLF) rallied 2.8%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 1.7% but ARK Genomics ETF (ARKG) finished off 0.3%.
Five Best Chinese Stocks To Watch Now
Apple Stock
Apple stock rose 2.7% last week to 148.69, reclaiming its 50-day line. That offered an early entry, but Apple earnings loom Thursday night. AAPL stock has an official buy point of 157.36 from a shallow cup base, according to MarketSmith analysis.
GM Stock
GM stock has formed a 59.44 handle buy point in a double-bottom base. General Motors earnings are due Wednesday, the same day as Ford Motor (F). Ford stock is flirting with a new high and a cup-base buy point.
Investors will want to know how both automakers are handling the chip shortage and whether or not they expect to boost production substantially in the coming months. EV plans also are key, with both traditional auto giants rolling out several new EVs in the coming months.
Google Stock
Earlier this month, Google stock reclaimed its 50-day line and broke a trend line, offering an early entry. But shares fell 3% on Friday, back below their 50-day line, as Snap’s weak revenue and guidance hit the digital ad ecosystem. Google earnings are due Tuesday night. Some negative news may have been priced into Google stock, but that’s no guarantee.
While GOOGL stock has been a strong performer over the past year, the chart does show a number of high-volume declines in the last several weeks.
Google stock has a flat base with a 2,925.17 buy point. If GOOGL stock can get above last week’s high of 2,873.25 after earnings, or even a trend line break, that could offer an early entry.
Microsoft Stock
Microsoft stock rose 1.6% to 309.16 last week, clearing a 305.94 flat-base buy point. That’s not a lot of cushion heading into Tuesday night’s earnings, but longer-term MSFT stock investors should be in good shape.
Cloud-computing services are fueling Microsoft growth in the past few years. Along with Google and Thursday night’s Amazon.com (AMZN) earnings report, investors will get a good idea about cloud-computing demand.
Why This IBD Tool Simplifies The Search For Top Stocks
ServiceNow Stock
NOW stock climbed 3.5% to 686.65 last week, clearing a 681.20 flat-base buy point. Investors might have wanted to take advantage of early entries a few days earlier. That would have provided a bit more of a cushion. ServiceNow earnings on Wednesday will provide an early read on business software. Atlassian (TEAM) reports Thursday night.
Upwork Stock
Upwork stock had a nasty sell-off in July but is setting up again with a cup-with-handle base. Shares fell 0.9% to 58.70 for the week. The UPWK stock buy point is 60.68. Earnings are due Wednesday night. UPWK stock has just been turning profitable while revenue growth is accelerating.
AMD Stock
AMD stock jumped 6.9% to 119.82 last week, following a 6.7% surge in the prior week. Shares rose past a 114.69 entry from a double-bottom base, and are now at the edge of the 5% buy zone. The better buy point might have been on Oct. 13, when AMD stock reclaimed its 50-day line and cleared some short-term resistance. AMD’s earnings also will be relevant for peer Nvidia (NVDA), which is flirting with an official breakout.
Market Rally Analysis
The stock market rally had a solid week, with the Dow Jones and S&P 500 hitting record highs. The Nasdaq composite rose solidly despite rising Treasury yields and big sell-offs Friday by Intel and Snap. While the Intel earnings report buoyed AMD stock and a number of chip-equipment makers, Snap’s sell-off triggered notable losses in a wide variety of digital ad firms, including Facebook (FB) and Google. The Nasdaq fell Friday, but came off lows.
There is breadth in this market, with a variety of sectors showing strength. From new IPOs to investment banks to software giants and steel plays, many leading stocks have broken out or flashed buy signals in recent weeks. Different sectors will take their turns from day to day or week to week.
Snap’s sell-off shows the danger of being too concentrated in a particular group or sector. And stocks can be in different groups, such as Snap and Trade Desk (TTD), and still trade on a similar “theme.”
Bottom line: The stock market rally, based on the major indexes and leading stocks, is looking healthy. But that could change quickly, especially with such a busy earnings week.
What To Do Now
You have to know which of your stocks are reporting earnings in the next couple of weeks. Do you have enough cushion to hold through earnings. While 5%-10% cushion is a good rule of thumb, you have to consider the size of your position, your conviction in the holding and the character of the stock.
It also doesn’t have to be an all-or-nothing decision. You can take partial profits ahead of earnings to minimize your risk while still holding a core position.
Also pay attention to companies reporting that are related to your holdings. That can provide a boost or big drag, as Snap and Intel rivals and suppliers showed Friday.
Build up your watchlist and pay close attention to those stocks near buy points that are reporting earnings. They could provide good buying opportunities.
Be ready to act on earnings news, good or bad, but don’t be too hasty. It’s usually a good idea to wait at least a few minutes after the opening bell before making buy or sell decisions.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Best Growth Stocks To Buy And Watch
Track Daily Stock Market Action With The Big Picture
Find Winning Stocks With MarketSmith Pattern Recognition & Custom Screens
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
Hedge fund sells stake in Trump SPAC firm DWAC after merger news
At least one hedge fund sold its stake in the SPAC Digital World Acquisition Corp. after the firm announced plans to merge with the social media company planned by former President Donald Trump.
Lighthouse Investment Partners, one of at least nine hedge funds to hold stakes in the Digital World Acquisition, shed its holdings in that special purpose acquisition company after learning of the merger with Trump’s venture, the fund told CNBC on Friday.
Lighthouse had owned 3.2 million shares, or 11.2% of the SPAC, according to a Sept. 30 regulatory filing.
“Lighthouse was not aware of the pending merger and no longer holds unrestricted shares of the SPAC,” the fund said. Asked if Lighthouse profited from their DWAC investment, the firm said it would not comment further.
The sell-off came as DWAC, saw a huge rise in the price of its stock price Thursday on the heels of the merger news.
DWAC shares spiked more than 100% on Friday after the stock more than quadrupled in price in the previous session.
It is not clear if the hedge fund sold to book profits from its stake in DWAC, or if it was worried about the risk of being associated with Trump, who as president was impeached twice and accused of inciting the deadly Jan. 6 Capitol riot by his supporters.
The social media app will be developed by Trump Media and Technology Group (TMTG).
Rafael Henrique | LightRocket | Getty Images
SPACs, also known as blank-check companies, are created to raise capital from public equity markets, and then use that cash to merge with a private company that has or will have an actual operating business.
The stock of that merged firm then will trade under the stock ticker created by the SPAC.
Investors in SPACs as a rule do not know the identity of the other firm that will be targeted for merger.
Among the other hedge funds listed in regulatory filings in September as major shareholders of DWAC, D.E. Shaw owned 8% of the SPAC, or 2.4 million of shares, while ARC Capital held a near 18% stake, or 6.6 million shares.
Other funds that held stakes as of last month, before the merger was announced, were Saba Capital Management, Highbridge Capital Management, Lighthouse Investment Partners, K2 Principal Fund, ATW Spac Management, Boothbay Fund Management and RG Capital Management.
Highbridge Capital Management and ATW Spac Management declined to comment when asked if they retained stakes in DWAC, and the rest of the hedge funds didn’t immediately respond to CNBC’s requests for comment.
Another fund listed as a major investor in DWAC is ARC Global Investments II, LLC.
The managing member of ARC Global is listed in a regulatory filing as Patrick Orlando, who is also the CEO of DWAC.
In an 8-K filing with the Securities and Exchange Commission on Thursday, DWAC said it had entered into an agreement and plan of merger with DWAC Merger Sub Inc., which is a wholly owned subsidiary of DWAC, and with Trump Media & Technology Group and ARC Global Investments II.
Trump’s company, the so-far-unlaunched Trump Media & Technology Group, said in an announcement Wednesday that its “mission is to create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley, which have used their unilateral power to silence opposing voices in America.”
Trump was banned by Twitter, his favorite social media platform, and by Facebook earlier this year after he was accused of sparking the invasion of the Capitol.
A top post on the WallStreetBets message board Friday featured what looked like the user’s equity portfolio, touting daily gains of over $10,000 from betting on DWAC. The post, which called the former president “Daddy Trump,” quickly drew more than 800 comments.
This is breaking news. Check back for updates.