Trump's SPAC deal thrown into limbo with extension deadline looming

Wall Street is quickly souring on the prospects of former President Donald Trump’s new social media company going public.

Digital World Acquisition Corp., a so-called special purpose acquisition company, struck a deal in 2021 to bring Trump Media & Technology Group into the public stock market. On Tuesday, Digital World executives had been expected to announce after a meeting whether enough shareholders had voted in favor of extending for one year the timeline for the two companies to complete the transaction.

But the executives decided instead to adjourn the shareholder meeting until Thursday to continue tallying votes to see if enough investors were in support of the extension.

If an extension cannot be reached by then, Digital World Acquisition may need to liquidate and return the money it raised back to investors.

A liquidation by Digital World Acquisition would cap off what has already been a wild ride for the SPAC since the agreement to terms on a deal with TMTG, which operates Trump's Truth Social and is led by Devin Nunes, the California Republican who left Congress in January to become the company’s CEO.

Shares in the SPAC plunged in trading Tuesday, falling as much as 21 percent.

A SPAC, or blank check company, is effectively a publicly traded skeleton company with no major operations of its own that sets out to acquire a private entity using cash raised from its initial public offering. The private company — in this case TMTG — then takes over the SPAC’s listing on a stock exchange, effectively making the deal an alternative route to publicly selling shares in the U.S.

The stock had become a favorite among retail investors, whose frenetic buying and selling has led Digital World Acquisition to see moves in the market that resemble those of the meme stock frenzy of 2021. And the deal has come under questioning by various government agencies, including the Securities and Exchange Commission.

Digital World Acquisition may still have more levers to pull in finalizing the deal, however. Executives themselves could extend the SPAC’s duration by another six months on their own, according to Reuters, which reported earlier that votes in favor of the extension were far below the threshold needed.

A spokesperson for Digital World Acquisition did not respond to a request for comment.

“Truth Social is continuing to grow rapidly, driven by extraordinary user engagement and the recent launch of ads on the platform,” a spokesperson for the Trump Media & Technology Group said in a statement to POLITICO. “TMTG will continue cooperating with all stakeholders in connection with its planned merger, and hopes the SEC staff will expeditiously conclude its review free from political interference.”