Finance News

Trump Media SPAC inventory doubles, bringing 2-day earnings to 800% on retail frenzy

The SPAC, which trades on the Nasdaq under the ticker DWAC, soared 284% at times, closing 107% at $ 94.2 per share. Trading in the share was discontinued several times due to the volatility. Friday's rally brought the SPAC's two-day gains over 800%.

The Trump Effect wasn't limited to DWAC.

Phunware, the advertising software startup involved in Trump's 2020 re-election campaign, jumped in line with DWAC. The stock rebounded a whopping 471% to $ 8.74 per share on Friday and brought its gains close to 750% this week. There was no indication that DWAC and Phunware had a business relationship.

Phunware did not immediately respond to CNBC's request for comment.

SPAC stands for Special Purpose Acquisition Company, which raises money in the public markets with the aim of merging with a private company and getting it public within two years. Investors typically have no idea what the target company will be when the SPAC debuts and goes public.

There were signs that small private investors might be behind the monstrous rally in the SPAC. As of Thursday, DWAC was the most actively traded single stock on Fidelity's broker platform. Meanwhile, the ticker was one of the most popular mentions on Reddit's WallStreetBets. The SPAC was also a trending topic on Twitter, suggesting that DWAC might have a meme-share moment like GameStop and AMC.

A top post on the WallStreetBets forum on Friday morning featured the user's stock portfolio and advertised daily winnings of over $ 10,000 from bets on the SPAC. The post calling the former president "Daddy Trump" quickly drew more than 800 comments.

The new company, the yet-to-be-founded Trump Media & Technology Group, said its "mission is to create a rival for the liberal media consortium and fight against the 'big tech' companies of Silicon Valley, using their one-sided power to silence opposing voices in America. "

The move came after Trump was banned from social media giants Twitter and Facebook since the beginning of this year after being accused by a mob of his supporters of instigating the January 6th Capitol riot. The violence interrupted the confirmation of Trump's loss of electoral college to President Joe Biden.

Warrants in the SPAC, which are traded under the ticker DWACW, experienced an oversized trading volume on Thursday. Warrants are a deal sweetener that gives early investors more compensation for their money. These are contracts that give the holder the right to purchase additional shares at a certain price in the future.

– CNBC's Dan Mangan contributed to the coverage.

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