Former US President Trump has announced plans to launch his own social media through a merger of his new company and a special-purpose acquisition company (SPAC). This has involved not only supporters but also those who are critical of him, creating an enthusiastic move to buy shares in the merger partner SPAC, Digital World Acquisition Corp.
Anthony Nguyen, 49, a software consultant in Austin, Texas, is just one of them. Nguyen, a Republican, refused to vote for Trump in last year’s presidential election.
Still, last week, he bought in Digital Acquisition shares as part of millions of online dating radars. The great buying power he joined helped boost the corporate value of Mr. Trump’s new company after the merger to about $ 12 billion.
The new company hasn’t even started piloting its own social media, Truth Social, and Nguyen has invested not because he believes in the success of this business model, but simply by hand. Because I want to make money quickly.
“If you’re asked if Trump’s social network works, it’s probably not good,” Nguyen said. “That doesn’t mean you won’t be profitable in the meantime.”
Digital World’s share price has jumped 842% since the announcement of the merger with Mr. Trump’s new company, Trump Media and Technology Group.
Based on Digital World’s closing share price on the 22nd, Trump Media is valued at $ 8.2 billion and the combined corporate value will be close to $ 12 billion.
This is based on the premise that Digital World calculates the stock price at the time of trading as $ 10 as a practice of SPAC merger. Details of the regulatory filings that will allow accurate calculations will be revealed later this week.
Not surprisingly, many investors who bought Digital World stock are Trump’s political supporters or fans. Shane Springer, 28, a salesman in Norristown, Pennsylvania, bought $ 1,300 worth of money last week through Robin Hood, an online brokerage firm. The stock price at that time was $ 13, but even if it rises to $ 175 on the 22nd, it will not sell firmly and will continue to hold it until it becomes much higher.
“Mr. Trump has a strong track record of making people,” Springer said. “If this was an election I would have failed, but it’s a business story.”
Meanwhile, Nguyen invested in the digital world, believing that it is similar to the soaring stock price of GameStop, a video game sales company that took place in January this year.
GameStop is a symbol of the so-called “meme stock”, which has risen sharply as a result of individual investors who exchanged information on the online bulletin board Reddit, etc., united and bought for a hedge fund that had a short selling position.
These investors have also actively bought other meme stocks, such as cinema chain AMC Entertainment Holdings and household goods retailer Bed Bath & Beyond.
Digital World is a SPAC, unlike meme stocks in that it is not sold short to hedge funds. However, Nguyen revealed that he felt the same smell in the enthusiasm of individual investors over Mr. Trump’s plans.
Nguyen bought $ 4,100 worth of Digital World shares at an average acquisition cost of $ 41 per share, and sold half for $ 4,800 when the stock price was $ 96. When the stock price reached $ 120, it sold a quarter for $ 3,000. “Investors want to keep up with the flow. If they are smart enough, they can enter the war, double their yuan and then withdraw.”
Some investors are looking at other stocks that could benefit from these soaring digital worlds. Portland construction worker Sam Nita, 36, spent $ 2,800 on Digital World last week and also bought $ 1,368 worth of US software-developed fanware stock. Funware is the company that worked on the Trump camp app in last year’s presidential election.
Nita learned about fanware through a stock trading app, and after the company’s stock price jumped up to 1471% on the 22nd, she made a total of $ 14,000 in investment in the digital world.
Nita, who voted for Mr. Trump in both of the last two elections, said, “Even my friends who have never traded stocks have heard that they want to know how to buy this’Trump stock’.” Said the spread of investment enthusiasm.
Crowder, Chief Operating Officer of Funware, told Reuters that the company is expected to grow by more than 50% quarter-on-quarter in the third quarter and more than 100% in the fourth quarter. He explained that the reason behind the excitement of investors is that they are building a decentralized data economy.
But for investors trying to predict whether Digital World’s stock prices will rise or fall in the future, there are few clues. The business plan briefing released by Trump Media last week contained the ambitious vision for a long time, but only a few financial statements.
Those who claim that Digital World stocks will rise further say that Mr. Trump had a large number of followers until Mr. Trump was suspended from each social media account following the January 6 attack on the US Capitol. It is the basis.
According to the materials, Mr. Trump’s followers were 89 million on Twitter, 33 million on Facebook, and 24.5 million on Instagram.
Conversely, bearish investors in Digital World stocks cite the setbacks of other right-wing social media such as Parlor. In addition, Digital World has warned that it is highly likely that it will buy from the ceiling of the stock price from here, since the price of SPAC has already risen to the largest ever.
Overall, SPACs have lost most of their appeal to individual investors even before Mr. Trump’s new social media program emerged. Companies that merged with SPACs failed to meet their grand financial goals, and many investors lost a lot.
Professor Jay Ritter (Finance) of the University of Florida, who studies capital markets, said the company and Trump Media, which saw soaring digital world stocks, continue to make more money at the expense of individual investors. He pointed out that it is a big risk for investors that they may aim to renegotiate the merger so that they can do so. “The higher the stock price, the greater the risk of price declines for investors,” he said.
* The content of the article is based on the information at the time of writing.