Trump SPAC Digital World falls almost 5% as Musk proposes completing Twitter deal

Former President Trump Holds Campaign Rally In Pennsylvania To Support Local Candidates

Spencer Platt

Trump SPAC Digital World Acquisition (NASDAQ:DWAC) dropped 4.9% on Tuesday amid a report that billionaire Tesla CEO Elon Musk has proposed completed his deal with Twitter (NYSE:TWTR).

Twitter (TWTR) was halted at one point and eventually jumped 22% on a Bloomberg report that Musk has sent a letter to the company proposing to proceed with his $44B buyout deal at the agreed price of $54.20/share. The Tesla boss later confirmed the letter.

Digital World (DWAC), which is taking Trump’s social media company and app Truth Social public, fell as some investors believe that a Twitter under Musk may allow Trump back on the Twitter social media platform. Trump, who has been banned from Twitter (TWTR), Facebook (META) and Google (GOOGL) is marketing Truth Social as an alternative outlet to those social-media giants.

DWAC investors are concerned about increased competition from a Twitter run by Musk, who has argued that his bid for TWTR is really about free speech. Investors also likely see the possibility that Trump, who had about 80M Twitter followers before he was banned, could return to the social media platform if Musk allows.

Trump said in April he won’t return to Twitter (TWTR) even after Musk originally agreed to purchase it and if Musk reinstated his account, according to a Fox News report.

Elon Musk in May said he would reverse Trump’s ban from Twitter if he succeeds in taking over the social media platform with his $44 billion deal.

Digital World (DWAC) shares have plunged 82% since the shares hit a high of $97 in early March amid concern about a Musk-led Twitter, several regulatory probes and most recently a shareholder vote on DWAC’s deal to go public was postponed as the SPAC didn’t have enough support from holders to approve a deal. Holders are now scheduled to vote on Monday.

Last month DWAC disclosed that it has received termination notices from PIPE investors representing $138.5 million of the $1 billion PIPE investment disclosed in December.