What on earth is a SPAC?
New York (CNN Business)Former President Donald Trump’s planned return to Wall Street is setting off a frenzy.
Shares of the shell company that Trump’s new media company plans to merge with surged as much as 284% on Friday, prompting a series of trading halts for volatility. In recent trading the company, Digital World Acquisition Corp., was up 150%.
At its peak of $175 on Friday, the Nasdaq-listed company was a staggering 1,657% above its Wednesday closing price.
Trump announced Wednesday night a deal to list Trump Media & Technology Group through what’s known as a SPAC, or a Special Purpose Acquisition Company.
The new Trump entity is merging with Digital World Acquisition Corp., which closed at just $9.96 on Wednesday. The stock quadrupled on Thursday and then climbed as high as $131.90 Friday morning.
The Trump SPAC is attracting interest from traders at WallStreetBets, according to Swaggy Stocks, which tracks mentions on the Reddit page. WallStreetBets is the Reddit group at the heart of the GameStop saga earlier this year.
The bonanza comes despite the fact that the latest filings do not indicate how much revenue — if any — Trump Media & Technology Group generates. It’s likely to be minimal given that the firm’s social media platform has not launched yet.
Trump’s businesses have a long history of filing for bankruptcy: Trump has filed four business bankruptcies, all focused on the casinos he used to own in Atlantic City.
The last Trump IPO occurred in 1995 when he brought Trump Hotels & Casino Resorts public. The casino company posted losses every year it was public, and a decade later, it filed for bankruptcy.
Source: Read Full Article