Truth Social, the brand new conservative-centered social media platform, witnessed an unfortunate loss of USD 58 million last year. Despite such a substantial financial setback, a handful of individuals and entities managed to extract profits. So, who are these entities that managed to turn the tide in their favor, even as Truth Social faces adversity?
DWAC, also known as Digital World Acquisition Corporation, is a vital player in this scenario. Serving as the special purpose acquisition company (SPAC) for Truth Social, DWAC’s shares rocketed by 357% upon the announcement of Trump Media & Technology Group’s (TMTG) impending merger. The former president, Donald Trump, heads TMTG, aiming to create a social media platform that boosts conservative voices. This situation turned the heads of investors and significantly increased DWAC’s market value.
Beneficial owners of DWAC warrants also made colossal profits. A stock warrant is an agreement between the company and the investor, allowing the investor to purchase company shares at a pre-decided price before the expiry date. Warrants are typically sold for additional funding and boost the potential for financial gain for both parties. This saw several owners achieve increases exceeding 1000% as the shares surged. These outstanding percentages led to David Einhorn’s Greenlight Capital, which held hundreds of warrants on DWAC shares, earning substantial profits.
Another unexpected beneficiary was hedge funds, often known for short-selling strategies, reaping profits from the rise in DWAC shares. While these funds are more associated with betting against companies, the surges in share prices following the TMTG announcement allowed them to share in the profits. As per the financial reports, Anchorage Capital Group, Glazer Capital, and Polar Asset Management Partners are some of the hedge funds that gained profits due to the surge in DWAC’s share prices.
Investors who recognized the market trends and bought shares at the right time are the next group who harvested profits. Among them, prominent is Sultan Qaboos bin Said of Oman’s sovereign wealth fund, known as State General Reserve Fund. It bought 227,000 shares of DWAC at an early stage, resulting in considerable earnings following the surge.
The pivotal lesson that analysts gathered from 2021 is that the potential for financial gain exists in versatile and unexpected areas of the market. Despite Truth Social’s losses, the promise of a new conservative social media platform attracted investors and increased the value of a largely overlooked SPAC. The entrancing combination of Donald Trump’s name and the allure of an alternative social media platform unleashed a torrent of market activity, resulting in many entities seeing significant profits. Even a risky venture can transform into a lucrative opportunity with the right market conditions.