As Donald Trump further solidifies his position as the front-runner in the race for the Republican presidential nomination in 2024, investors are piling back into a blank-check company seeking to acquire his media company. DigitalWorldAcquisitionCorp. The stock surged nearly 200% in a six-day winning streak, taking the stock to its highest level since May 2022. After Trump's rival Ron DeSantis withdrew from the election, the stock soared 88% on Monday, the largest one-day rise since October 2021.
The former president's resounding victory in the Iowa caucuses kicked off the SPAC market. After more than two years and various regulatory hiccups, the deal to acquire the Trump Media & Technology Group behind TruthSocial is still not complete.
"The market has gone completely crazy," said Accelerate Financial Technologies Inc. said CEO Julian Klymochko. The company has a SPAC-focused fund. He believes the current share price represents an "excessive" valuation of $8 billion. "The share prices do not reflect any fundamental intrinsic value of TruthSocial; they are more like 'trading sardines' or speculative vehicles," he said in an email.
The latest surge comes as investors switch to out-of-the-money call options - a favorite strategy among retail investors and the driving force behind many of the previous moves in internet celebrity stocks. Call options above $55 were the most active, reaching levels not touched since April 2022. The stock has been trending on Reddit's WallStreetBets and trader chatroom StockTwits in recent days.