Regulatory scrutiny means it will likely never merge with Trump's Truth Social media platform

[LetMyPeopleVote]

I have been skeptical of the proposed merger between a SPAC and TFG's media company (the one sort of running Truth Social) ever being consummated. Special Purpose Acquisition Companies (SPACs) are sketch and the SEC is looking at these vehicles. It seems taht the SEC is really looking at the deal between a SPAC and TFG's shell company. In addition, SPACs can be sketchy as to valuation but in most cases the company being acquired has some value so that the proposed value of the merged company has some relation to reality.

It seems that some people are doubtful that TFG's media company and a SPAC

Link to tweet

https://markets.businessinsider.com/news/stocks/digital-world-acquisition-stock-price-dwac-trump-truth-social-kerrisdale-2022-4

Digital World Acquisition, the SPAC that plans to merge with former President Donald Trump's Truth Social, fell 9% on Wednesday after Kerrisdale Capital released a short report targeting the company.....

That view is driven by Kerrisdale's belief that DWAC will fail to complete its merger with Truth Social, combined with the fact that poor execution at Truth Social puts into question its ability to successfully launch an alternative social media platform.

"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.....

Digital World is already under active investigation by the enforcement division of the SEC, Kerrisdale highlighted. "DWAC is not just another dubious 2021 SPAC; it is a poster child for some of the worst abuses the investment vehicle has spawned," Kerrisdale said.

And even if a deal does get done between Truth Social and Digital World, the company's current valuation "is absurd and financial projections are based on the flimsiest of assumptions," Kerrisdale said.

If this deal does not close, Devin Nunes will be looking for work

[elleng]

1. Hope you're right 'taht the SEC is really looking at the deal.'

[LetMyPeopleVote]

2. Why Digital World Acquisition Corp Is Falling Today

The reports of SEC investigations have been circulating for a while. Unlike the DOJ, the SEC is not known for keeping investigations secrete

Link to tweet

https://www.fool.com/investing/2022/04/25/why-digital-world-acquisition-corp-is-falling-toda/

The Securities and Exchange Commission (SEC) has been scrutinizing the SPAC industry intensely, and Kerrisdale said that the regulator has an opportunity to send a message to the entire SPAC industry by rejecting this deal.

Kerrisdale waved numerous red flags regarding Trump Media & Technology Group, among them asserting that it lacks the "infrastructure necessary to function as a public company." The hedge fund also believes that the deal is unlikely to go through because one of Digital World's sponsors has seen multiple SPAC deals it was behind rejected by the SEC.

Those earlier deals were killed, Kerrisdale concluded, because the SEC found that the companies in question "lacked even basic indicia of credibility or legitimacy."

Shares of Digital World took off last year after the SPAC announced it would merge with the Trump Media & Technology Group, largely because investors believed that Trump could bring an audience to the platform, allowing it to challenge mainstream social media apps.

[elleng]

4. Thanks

[LetMyPeopleVote]

3. This will be fun to watch

Link to tweet