Trump-Tied Social Media SPAC Slides After Key Executives Quit

Apr 4th, 2022 10:48 EST

(Bloomberg) — Shares of the shell company taking Donald Trump’s media venture public extended their selloff after a report that a pair of key executives resigned and Elon Musk bought a sizable stake in social media competitor Twitter Inc.

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Digital World Acquisition Corp., the special-purpose acquisition company merging with Trump Media & Technology Group, fell as much as 14% Monday to extend a losing streak for a seventh-straight day as downloads of the Truth Social app dry. The decline was triggered by a Reuters report that Truth Social’s chiefs of technology and product development Josh Adams and Billy Boozer have resigned and as Musk became Twitter’s largest shareholder.

Shares of the SPAC have lost 22% since March 25. Monday’s drop marks the latest disappointment for investors betting that the former president could create a media company rivaling the likes of Twitter and Facebook. More than two million shares traded in the first hour of the session, almost twice the average volume for that stretch over the past 30 days. Warrants for the SPAC slipped over 10% to $14.51.

Details surrounding Trump’s media venture have been scarce, but the rollout of Truth Social has been plagued by snags as users were told they couldn’t sign up and others received error messages. Despite being available for more than a month, hundreds of thousands of users who were able to download the app are still on a waiting list without access to its full functionality and the app is not yet available to Android users. Downloads of Truth Social have declined 95% to less than 8,000 per day from an initial boom of 170,000 when it launched in February, according to research firm Apptopia.

Representatives for Trump Media & Technology Group and Digital World didn’t immediately respond to Bloomberg News emails requesting a comment.

Musk’s stake in Twitter comes after he polled his followers on the social media website last month, asking whether the platform adheres to the principles of free speech. After more than 70% said no, the billionaire chief executive officer of Tesla Inc. asked whether a new platform was needed, adding that he was giving serious thought to starting his own.

The aim of Trump Media & Technology group is to rival “the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley,” according to an October statement.

Retail traders weren’t as quick to snap up shares of Digital World, with it ranking just 17th among the most bought assets on Fidelity’s platform. The buying lagged the demand for Twitter, which was the top trade in the first half hour of Monday’s session and the biggest percentage gainer in the S&P 500, rising 26%.

On Thursday, Digital World hit yet another snag, saying it was unable to file its form 10-K annual report with the SEC within the prescribed time period.

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