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Shares of Digital World Acquisition Corp. soared about 30% on Monday after an appeals court substantially reduced the bond former President Donald Trump has to post in a civil fraud case, and the company announced it will start trading as DJT on Tuesday.
The appeals court reduced the bond amount to $175 million from $454 million, and extended Trump’s Monday deadline to post the bond by another 10 days.
The ruling came after the approval of a merger between the shell company and the social media group owned by former President Donald Trump.
The DWAC jump Monday was likely driven mostly by news of the reduced bond. Investors in the company initially feared Trump might try to sell some of his majority stock in order to free up cash if he were required to post a bond north of $400 million.
With the bond reduced to $175 million, the odds that Trump would try to sell his shares or pressure the board to alter the merger’s lock-up provisions both fell significantly.
DWAC shareholders voted Friday to approve the combination between the special purpose acquisition company, or SPAC, and Trump Media & Technology Group, the owner of the social media platform Truth Social.
Shares in the merged company will begin publicly trading Tuesday under the ticker symbol DJT, Trump’s initials.
The company’s debut on public markets could provide a financial boost to Trump, who is expected to own 80 million shares, which could be worth around $3 billion or more, in the new company.
Under the deal’s current terms, Trump will not be allowed to sell shares in the company for at least six months.
However, the board of directors could vote to permit Trump to sell shares earlier. The board is expected to include several people close to Trump, including his son Donald Trump Jr. and Trump’s former trade representative, Robert Lighthizer.
A potential windfall from selling shares could help pay for Trump’s legal bills and damage judgments of over $500 million in three separate cases.
Monday’s rise comes after the stock fell nearly 14% Friday after DWAC shareholders signed off on the merger. The stock has soared more than 150% this year but has lost about 20% since hitting its 52-week high on Jan. 23.