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Actions of Digital World Acquisition Corp. soared 35% Monday after an appeals court significantly reduced the bail former President Donald Trump had to post in a civil fraud case, and the company announced it would begin trading as DJT Tuesday.
The appeals court reduced the bail amount from $454 million to $175 million and extended Trump’s Monday deadline for posting bail by another 10 days.
The move comes after a merger between the shell company and the social media group owned by former President Donald Trump was approved.
DWAC’s jump on Monday was likely mainly due to the bond cut announcement. The company’s investors initially feared that Trump might try to sell some of his majority shares to free up cash if he were to post bond worth more than $400 million.
With the bond reduced to $175 million, the odds that Trump will attempt to sell his shares or pressure the board to change the merger’s blocking provisions have both decreased significantly.
DWAC shareholders voted Friday to approve the combination between the special purpose acquisition company, or SPAC, and Trump Media & Technology Group, owner of the social media platform Truth Social.
Shares of the combined company will begin trading on the stock exchange on Tuesday under the symbol DJT, Trump’s initials.
The company’s public market debut could provide a financial boost for Trump, who is expected to own 80 million shares, which could be worth about $3 billion or more, in the new company.
Under the current terms of the deal, Trump will not be allowed to sell shares in the company for at least six months.
However, the board could vote to allow Trump to sell stock sooner. The board is expected to include several people close to Trump, including his son Donald Trump Jr. and Trump’s former trade representative Robert Lighthizer.
A potential windfall from stock sales could help pay Trump’s legal fees and damage judgments of more than $500 million in three separate cases.
Monday’s rise comes after the stock fell nearly 14% Friday after DWAC shareholders approved the merger. The stock has soared 160% this year, but has lost about 15% since hitting its 52-week high on Jan. 23.
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