The Wall Street Journal reports:

Former President Donald Trump unveiled a new digital-media venture Wednesday and said it would go public by merging with a special-purpose acquisition company.

Also called a blank-check firm, a SPAC is a shell company that lists on a stock exchange with the sole intent of merging with a private firm to take it public. The private company then gets the SPAC’s place in the stock market. SPAC mergers have exploded in popularity in the past year for many startups because they are allowed to make projections about their business. Those aren’t allowed in normal IPOs.

The Digital World Acquisition SPAC has about $290 million on hand. Mr. Trump’s firm could use the money held by the SPAC to fund its growth, but that cash pile could shrink. That is because SPAC investors have a right to pull their money out of the deal before it is completed. Such withdrawals have skyrocketed in recent months, with shares of many SPACs falling after some companies that went public this way struggled to meet their growth targets. [Continue reading…]

CNBC reports:

The stock price of SPAC company Digital World Acquisition Corp. skyrocketed on extremely heavy trading volume Thursday after news of a merger that would launch former President Donald Trump’s planned social media platform.

DWAC’s stock surged 356.8% to close at $35.54 per share. Trading in the SPAC was halted multiple times due to volatility. At one point, the stock was up more than 400% to hit a high of $52.

Thursday’s rally could mean massive returns for insiders involved in the deal, including a handful of hedge funds. D.E. Shaw owned 8% of the SPAC, or 2.4 millions of shares, while ARC Capital held a near 18% stake, or 6.6 million shares, according to regulatory filings. Saba Capital Management, Highbridge Capital Management and Lighthouse Investment Partners were also big early investors of the SPAC.

A corporate overview of Trump’s new company does not list any officers, employees, or operations. [Continue reading…]