For the first time in months, Digital World Acquisition Corp (NASDAQ:DWAC) finally has some good news to report. The special purpose acquisition company (SPAC) has announced that it will extend its deadline to merge with the Trump Media & Technology Group (TMTG).
Given how turbulent its mission of merging with the Truth Social parent company has been, this decision definitely makes sense. But it isn’t a done deal yet, as shareholders still need to vote on the motion.
While this news sent DWAC stock up this morning, investors should still approach the company with extreme caution. Donald Trump’s legal troubles are just heating up, and they could cause significant problems for his company’s SPAC partner.
What’s Happening With DWAC Stock
DWAC stock has had a bumpy time this morning but has still seen quite a spike in price. As of this writing, it is up about 8% for the day. Until today, the stock had spent the week trending downward amid constant volatility. But since coming down from its late July surge, DWAC still hasn’t managed to make up the ground it has lost.
According to a recent 8-K filing with the U.S. Securities and Exchange Commission (SEC), the two companies have set an outside date for Dec. 31, 2023. This means that they now have several more months to reach a mutual commitment to the merger. But this isn’t the only new extension that could benefit the company. As TipRanks reports:
“DWAC has also roped in a new independent auditor and received an extension to file its amended annual report as well as quarterly report for the period ending March 31, 2023. Importantly, with this amendment, TMTG, and DWAC can move forward on mutual due diligence and execute a business combination in the coming months.”
While this gives DWAC stock more time to rebound, that doesn’t mean it will. As noted, Trump is facing severe legal problems that threaten his chances of reelection in 2024. The possibility of him going to prison looms larger than any deadline. For that reason, DWAC remains a highly risky investment, even as its deadline to complete the merger is pushed back. It is likely that the company is simply buying itself more time in hopes that Trump’s legal woes will be resolved before the next deadline.
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.
