Why Is Digital World Acquisition (DWAC) Stock Down Today?
There’s a double-whammy of developments surrounding Digital World Acquisition (NASDAQ:DWAC) from yesterday and today. First, DWAC stock traders may be concerned about a reported staff reduction at Trump Media & Technology Group …
There’s a double-whammy of developments surrounding Digital World Acquisition (NASDAQ:DWAC) from yesterday and today. First, DWAC stock traders may be concerned about a reported staff reduction at Trump Media & Technology Group (TMTG), the parent company of Truth Social. Moreover, investors are weighing the implications of a federal investigation of Trump Media over possible money-laundering activity.
Digital World Acquisition is really just a shell company. Its purpose is to bring TMTG to the market and make it publicly tradable. Truth Social, meanwhile, is a conservative-leaning media business founded and endorsed by former President Donald Trump.
A report from Bloomberg indicates that TMTG has reduced its staff by around six people. Furthermore, the company did this “while awaiting regulatory approval for a merger that offers a ﬁnancial lifeline.” In support of this, the Bloomberg report cited “two people with knowledge of the matter.”
These aren’t all low-ranking personnel cuts. Apparently, Chief Technology Officer William “BJ” Lawson is among the staffers being let go. Additionally, sources close to the company estimate that TMTG “can fund operations through September at present spending levels.”
What’s Happening With DWAC Stock?
DWAC stock opened today’s trading session down 5%, but within an hour, shares were down around 3%. There may be more downside ahead, though, as there’s another development for Digital World Acquisition’s investors to consider.
The British news organization, The Guardian, cited “sources familiar with the matter” in reporting a probe into Truth Social from last year. According to The Guardian, federal prosecutors examined Truth Social concerning allegations it had “violated money laundering statutes in connection with the acceptance of” $8 million “with suspected Russian ties.”
The allegations concern two loans that were wired to Trump Media “through the Caribbean, from two obscure entities.” Also, both of those entities allegedly “appear to be controlled in part by the relation of an ally of Russian President Vladimir Putin.”
So, staffers are getting laid off, and allegations are circulating in the media. It’s a complicated situation for DWAC stock traders to assess, and some of them are selling now and asking questions later.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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