DWAC Stock Falls 15% After Elon Musk Buys Twitter for $44 Billion

• Digital World Acquisition fell 15% on Monday after Elon Musk bought Twitter for $44 billion. 
• Digital World is in plans to merge with former President Donald Trump’s social media company, Truth Social.
• “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said.

Shares of the special purpose acquisition company planning to merge with former President Donald Trump’s social media platform continued their decline on Monday after Elon Musk bought Twitter.

Digital World Acquisition fell as much as 15% in Monday trades. The decline was sparked early in the morning after a report said Twitter’s board of directors were moving closer to Musk on a deal. By Monday afternoon, the deal was made official between Musk and Twitter. 

Musk will buy Twitter for $44 billion, or $54.20 per share, which represents a 38% premium to Twitter’s closing price on April 1, which was the last trading day before Musk disclosed his 9% stake in the company. The deal will be all cash and it’s expected to close by the end of the year.

Musk has criticized Twitter on free speech issues and censorship in the past. Under his control, Trump’s Truth Social, billed as a free speech alternative to Twitter, would likely be less appealing to both users and investors. Some think Musk’s ownership of Twitter will open up the possibility of Trump returning to the social media platform after being banned from it last year.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated. I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it,” Musk said.

For Digital World investors, Monday’s decline is only the continuation of a months long trend as the stock price moves closer to its

SPAC

IPO price of $10 per share. Following the announcement of its planned merger with Truth Social last year, the stock briefly spiked to a high of $175. The stock is down more than 77% from those record levels.

And one hedge fund expects the decline to continue, according to a short report released last week. Kerrisdale Capital believes due to regulatory scrutiny, a deal between the Digital World SPAC and Truth Social won’t get done, and that the stock should head back to $10 per share.

“DWAC’s stock has much further to fall given the demonstrably misleading statements in DWAC’s registration statement, the status of TMTG’s operations at the time the merger agreement was executed, the cast of characters seeking to consummate that merger and those individuals’ flagrant disregard for SEC rules and regulations,” Kerrisdale said.