Digital World Acquisition Corp (NASDAQ:DWAC) has finally received the news most people who follow the company have been expecting. The special purpose acquisition company (SPAC) has received a delisting notice from the Nasdaq. According to the exchange’s Listing Qualifications Department, DWAC stock has violated Nasdaq Listing Rule 5250(c)(1) by failing to file its “Quarterly Report on Form 10-Q” for the period that ended on March 31, 2023, with the U.S. Securities and Exchange Commission (SEC).
According to a statement released by the company, DWAC has 60 calendar days to submit a plan for regaining compliance. This gives it until July 24, 2023, to determine the best way to keep trading on the Nasdaq. But even if it can, DWAC stock won’t be a good buy. It certainly isn’t now, as the company’s future hangs in the balance.
What’s Happening With DWAC Stock
Since the company’s future is on the line for the next two months, it’s no surprise that shares are falling today. As of this writing, DWAC stock is down 1% for the day after extreme volatility as markets opened. This is commonplace for the unstable stock that can’t seem to find its footing on the best market days. But that’s exactly what investors should expect from a company whose success entirely depends on Donald Trump. As InvestorPlace contributor Will Ashworth puts it, why should investors bet on a company whose principal asset is an indicted former president?
In short, the answer is that they should not. DWAC is a company that seems to only have bad news to report. Trump’s indictment certainly hasn’t helped, but the truth is that DWAC stock has been dealing with serious legal and economic headwinds since long before that. The company has received numerous legal probes by the SEC and recently parted ways with CEO Patrick Orlando. It has progressively trended downward through it all, shedding almost 50% of its value over the past six months. Despite a slight bump it received from the indictment, it has given investors no reason to believe that a rebound is possible, let alone likely.
A Delisting Threat and Still No Merger Agreement
Now comes perhaps its biggest challenge yet as the company faces the possibility of being delisted from the Nasdaq. While it could theoretically end up on an over-the-counter (OTC) exchange, that isn’t likely to help matters.
Investors also shouldn’t forget that DWAC still hasn’t closed its merger with Trump Media & Technology Group (TMTG). The company also has a pressing deadline on that front. If the two parties don’t reach an agreement by Sept. 8, it’s game over for DWAC stock. Granted, the July deadline is coming up sooner, and if the company fails to regain Nasdaq compliance, it won’t end up mattering. But regardless, DWAC is caught between a rock and a hard place with no clear way forward.
At this point, investors have absolutely no reason to bet on DWAC stock. The company can’t stay out of trouble and can’t make a move without a constant onslaught of negative headlines. Even if it stays on the Nasdaq, it still won’t be worth buying. But as the possibility of delisting grows, there is even more reason to sell DWAC while it can still be sold.
On the date of publication, Samuel O’Brient 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.
