Hedge funds made millions in potential gains as the shares of a special purpose acquisition company (Spac) that merged with Donald Trump’s new social media soared to 421 per cent yesterday, the Financial Times reported.
Called Digital World Acquisition Corporation, the Spac’s shares rose from $9.96 to $51.90, closing at $45.50 – a 357 per cent increase compared to the previous day.
The group of 11 hedge funds – including DE Shaw and Saba Capital – bought Digital World in September and owns almost all of its $293m IPO. After the deal with Trump, the Spac’s 25 million units listed were worth collectively more than $1bn.
According to the paper, Digital World granted 150,000 sponsor shares to each hedge fund at $0.0029 per share.
The firms will not able to sell these shares until the deal with Trump Media & Technology Group, the parent company that owns the former President’s social media, is closed. The deal values Trump Media & Technology Group at $875m.
Trump made the headlines yesterday when he announced the launch of his social media app, TRUTH Social to “create a rival to the liberal media consortium and fight back against the ‘Big Tech’ companies of Silicon Valley.”
Banned from both Facebook and Twitter, Trump said in the release that “we live in a world where the Taliban has a huge presence on Twitter, yet your favourite American President has been silenced. This is unacceptable.”