Retail traders are putting aside politics for profits when it comes to former U.S. President Donald Trump.
Popular haunts of individual investors such as Reddit and StockTwits lit up this week with news that blank-check company Digital World Acquisition Corp. will merge with Trump Media & Technology Group. The SPAC, which trades under the ticker DWAC, had rocketed up more than 1,200% since Wednesday, with outsize volatility triggering at least 12 trading halts on Friday.
Not many details about the to-be merged company have been released, besides that Trump plans to start a new media and tech empire that’ll include Truth Social network — potentially helping him make a return to the online sphere after he was banned from Twitter and Facebook. That lack of clarity hasn’t stopped hordes of day traders from piling into DWAC and boosting its price.
Jesse Kimotho, a student at Yale University, said he made $12,000 by investing $2,000 in DWAC on Thursday and then selling out Friday at 11 a.m. New York time. The 24-year-old said he wasn’t a fan of the Trump administration but couldn’t ignore the talk about the SPAC on Twitter as its price continued to tick higher.
“It was just going up and up,” he said. “I'm a bit liberal and I kind of had to put that aside so I could make money.”
Values outside of finance — like those measured by environmental, social and governmental criteria — are relatively new considerations for professional investors. What sets a Trump-connected SPAC apart from the usual ESG considerations is his polarizing politics, injecting personality into trading decisions.
None of Trump’s earlier plans to start a social media firm have come to fruition. A blog where he posted statements attracted relatively few readers and was abandoned earlier this year. He’s barred from Twitter permanently, while Facebook has said he’d remain suspended for at least two years. The Truth Social network is planned for the first quarter of 2022, with a subscription video on-demand service potentially coming later.
For Adrian Estrada, a 34 year old in Chicago, the hype around the Digital World Acquisition SPAC after its deal with Trump signaled it was worth paying attention to. He bought in at $13.41 a share and then closed his position when DWAC reached $144.05.
“Nothing about this trade was based on fundamentals,” he said. “I'm not a Trump fan nor a supporter, but I saw the volatility and unusual activity.”
The final tumultuous year of Trump’s presidency coincided with a boom in retail trading, amid the stock market’s seemingly unending march higher. For the investors who didn’t join the frenzy in time to reap those benefits, the new SPAC represents a fresh chance to make money. That’s the case for Sarah Mostafa, 31, who works as a physical therapist in New York City.