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Trump-Tied SPAC Drops on Report It Can’t Get Deadline Push

(Bloomberg) — Investors dumped shares of Digital World Acquisition Corp., the blank-check firm set to merge with Donald Trump’s social media company, after a report said it failed to get enough support for an extension to complete the deal.

Executives at the special purpose acquisition company don’t expect to get enough shareholder support for a one-year extension to complete a deal with Trump Media & Technology Group, Reuters reported, citing people familiar with the matter. The shares fell as much as 21% to $19.70 on Tuesday, the lowest since the deal was announced in October, while warrants tied to the SPAC sank 17%.

The company — which needs 65% of shareholders to support the extension — is now weighing delaying the vote deadline among other options, Reuters said. The shareholder meeting is scheduled for noon in New York on Tuesday and the company has been active in recent weeks, courting retail traders to vote — a group that historically misses out on similar events.

Digital World shares soared to $175 after the merger with the former President’s company was announced in October, becoming a favorite among retail traders. The launch of Trump’s social media site, Truth Social, in February, provided another boost, before disappointing downloads for the platform and regulatory issues facing Digital World weighed on the shares.

The SPAC gave itself a one-year deadline to get a deal done when it debuted last September before risking the need to return the millions it raised to investors. The sponsor’s terms do give it an option to extend its deadline to up to six months, however, that would cost the team millions of dollars as it would push cash into its trust account.

“I’m not touching it,” said Matthew Tuttle, chief executive officer at Tuttle Capital Management. The risk is too great and even if the SPAC extends its deadline by six months, “that may just kick the can down the road.”

Retail traders were actively discussing Digital World’s stock Monday, however, they didn’t appear to be actively buying the dip. The company’s ticker was trending on popular chatroom, Stocktwits, but wasn’t among the 30 most traded assets on Fidelity’s platform as of 9:45 a.m. in New York.

The blank-check firm said in July that a federal grand jury is seeking information from Trump Media & Technology Group about the planned deal, while the Securities and Exchange Commission issued a subpoena for similar information the same week. Digital World said at the time that the grand jury is also seeking information from certain current and former TMTG personnel.

CF Acquisition Corp. VI, a SPAC taking video platform Rumble Inc. public, rose 3.3% ahead of a deadline for its shareholder vote next week. Rumble has a technology and cloud services pact with Trump Media.

(Updates with share movement, additional detail throughout.)

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