Trump SPAC Digital World plunges after Musk agrees to buy Twitter (update)

Donald Trump Holds Rally At Iowa State Fairgrounds

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Update 3:52pm: Update shares, adds Twitter deal announced, report on Trump not returning to Twitter.

Trump SPAC Digital World Acquisition (NASDAQ:DWAC), which is taking Trump's social media company public, dropped 12% after Elon Musk agreed to buy Twitter (TWTR) for $44 billion.

Shares of DWAC, which is taking Trump's Truth Social platform public, have been weak in recent weeks following the disclosure that Musk had taken a large stake in Twitter. Trump, who has been banned from Twitter (TWTR), Facebook (FB) and Google (GOOGL), is marketing Truth Social as an alternative outlet to those social-media giants.

DWAC investors are concerned about increased competition from a Twitter run by Musk, who has argued that his bid for TWTR is really about free speech. Investors also likely see the possibility that Trump, who had about 80M Twitter followers before he was banned, could return to the social media platform if Musk allows.

Trump said he will not return to Twitter (TWTR) even after Musk agreed to purchase it and if Musk reinstated his account, according to a Fox News report. Trump told the news network that he would start "TRUTHing" over the next week.

"I am not going on Twitter, I am going to stay on TRUTH," Trump told Fox News. "I hope Elon buys Twitter because he’ll make improvements to it and he is a good man, but I am going to be staying on TRUTH."

Trump earlier this month said that he probably wouldn't return to Twitter if Musk takes over, according to media reports.

The 12% decline in DWAC reverses an 8% gain on Friday on news that that Truth Social migrated to Rumble's cloud infrastructure. The announcement comes as Truth Social has been plagued by technology issues since its launch in late February and some high level executives have exited the firm. YouTube competitor Rumble, which agreed in December to go public through SPAC CF Acquisition IV (CFVI), announced a partnership with Truth Social in December, where Rumble would provide cloud services as well as deliver video and streaming for Trump's social media platform.

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