Is there a sentence that is more 2021 than a SPAC backed by former President Donald Trump surged by 1,500% in a matter of 48 hours? Well that’s exactly what happened this week in what has to be one of the largest two-day pops in recent memory. That’s right, we’re talking about Digital World Acquisition Corp (NASDAQ:DWAC), which was the hottest stock ticker on both Reddit and Twitter this week. If you had our alerts on, you managed to make a pretty tidy profit when the stock went from $9.96 to a high of $175.00 per share. So what’s the deal behind DWAC?
As we mentioned, DWAC is a shell entity that is looking for a private company to bring to the public markets. Remember when SPACs were all the rage? Well, apparently the markets have a short memory because basically none of the SPAC mergers from earlier this year are currently trading above their $10.00 NAV price. So what fueled this meme-like ride to these gaudy price levels?
On Wednesday, Trump made the announcement that DWAC would be merging with a new social media platform of his called Truth Social. Now, if you remember, Trump is currently in the second year of an indefinite ban from both Twitter and Facebook, so creating his own social media platform is one way to get around being blacklisted. Well, as we saw, retail investors took that news and ran straight to their brokerage accounts. Within minutes of the announcement, DWAC was the talk of both Reddit and Twitter, as the ticker symbol dominated the most talked-about stocks list in subreddits such as r/WallStreetBets.
Truth Social isn’t going to be open to the public until 2022, but investors are probably banking on Trump’s popularity when he was on social media. It’s been a while, but when Trump used to tweet it would instantly go viral. At the time of his ban from Twitter, Trump had nearly 90 million followers, many of whom are still loyal to the former president today. The announcement also comes when sites like Facebook are vulnerable and already beaten down from the anti-big tech sentiment that is all the rage these days.
So by the closing bell on Friday, DWAC had pulled back to a slightly more reasonable price of $94.20. You can’t blame traders for taking profits here, especially with it being a SPAC stock that has no real business fundamentals to prop up that lofty price. Just looking at the chart for DWAC, that is one heck of a spike on Friday. But why wait until Friday when all the chatter was already happening on Wednesday?
So where does DWAC go from here? What goes up must come down? We’ve seen comparisons to a short squeeze, but remember that DWAC is a SPAC so it’s not exactly a stock that is heavily shorted. If no short positions need to be covered, then price action is determined by traders who are buying up more shares.
Despite DWAC falling back down to Earth on Friday, it remains the top mentioned ticker symbol across Reddit, with a staggering upvote volume over the past 24 hours. It has nearly ten times the upvotes of the next most mentioned stock, which is GameStop (NYSE:GME), although Reddit conversation volume has been waning as the day goes on. Other ticker symbols like Tesla (NASDAQ:TSLA) briefly overtook DWAC, as the EV stock closed the week at a new all-time high price.
Our Chatterquant alerts were hitting early and often with DWAC, as well as other huge runners like Phunware (NASDAQ:PHUN) which peaked at 1,530% in a matter of hours. Another SPAC, Benessere Capital Acquisition Corp (NASDAQ:BENE) is a sister stock to DWAC, and it surged by over 50% in sympathy. Were you one of the traders that banked off of Chatterquant’s social media sentiment alerts? If you are then congratulations on following the flow and having yourself an incredible week. If you missed out, there’s only one way to ensure you don’t ever miss another 1,500% runner again.
