Shares of Digital World Acquisition have more room to fall, according to a report Wednesday from Kerrisdale Capital announcing its short position, Bloomberg reports. DWAC gave misleading statements in registration documents and the high-profile nature of its potential combination with the former president’s company, Trump Media & Technology Group, is an “ideal way” for regulators to send a message to the broader industry, Kerrisdale said in its report.
“DWAC is not just another dubious 2021 SPAC; it is a poster child for some of the worst abuses the investment vehicle has spawned,” according to the report from Kerrisdale, which is led by founder and chief investment officer Sahm Adrangi.
“Truth Social’s disaster of a launch, among many other red flags regarding TMTG, raise valid concerns over execution and the company’s long-term viability,” Kerrisdale said in the report. “These factors raise serious doubts regarding the scope of due diligence DWAC conducted.”
DWAC will likely never file an S-4 with documentation of that due diligence, which will doom the merger, according to the report. That would wipe out 80% of its current share price of $45.61 and bring it back down to the $10 level where most SPACs raise capital. Read more.
