In another sign that the Trump-fueled craze had died down, or at least moderated a bit, the share price of the advertising software start-up Phunware tumbled 20% on Monday.
Phunware, which was involved with Trump’s 2020 reelection campaign, saw a 470% surge in price on Friday.
There is no indication that DWAC and Phunware have a business relationship. But Phunware’s rise last week coincided with the spike in the SPAC’s stock.
Short-seller Iceberg Research unveiled a bearish position on the DWAC on Monday, saying that investors face uncertainties in this blank-check deal as Trump could become a dominant shareholder after the merger.
“Now that initial excitement has passed, we see only risks for investors in near future. Based on Trump’s track record, at current price, renegotiation is likely to keep more of the merged company for him,” Iceberg Research said in a tweet.
“SPAC holders don’t own a piece of this project yet. Trump has leverage, not them.”
DWAC remained a popular chatroom topic among retail traders, who were credited last week with turning the SPAC into the latest hot “meme” stock in 2021.
The DWAC ticker was the second-most popular name on Reddit’s WallStreetBets chatroom on Monday, after Tesla, the electric-vehicle giant that hit a $1 trillion market capitalization on the same day, according to alternative data provider Quiver Quantitative.
One trending post on WallStreetBets on Monday said “DWAC- ALL IN,” which attracted more than 500 comments.
SPACs, also known as blank-check companies, are created to raise capital in the public equities markets, with the goal of using the cash to purchase or merge with private firms.
Trump’s new social media company, Trump Media & Technology Group, on Wednesday said it and DWAC had reached an agreement to merge so that the former president’s firm will become a publicly listed company.