Three stocks with ties to former President Donald Trump surged Friday after two sources familiar with the case told CNN that Trump faces 30 counts related to business fraud in an indictment from a Manhattan grand jury.
It’s not clear why investors sent shares of those companies soaring Friday, although the stocks tend to swing wildly — surging and plummeting — when Trump makes news.
Shares of Digital World Acquisition Corp., the blank-check firm seeking to merge with Trump’s media venture, rose 10% Friday. Phunware (PHUN), the company that developed the Trump campaign’s mobile app for the 2020 presidential race, gained 3%. And Rumble (RMBL), a conservative video platform that partners with Trump’s Truth Social app, also rose 3%.
The stocks have moved significantly before when Trump has been in the spotlight. For example, DWAC shares soared after Republicans won the House of Representatives in November 2022 (though shares have fallen 55% since then).
DWAC announced plans in October 2021 to acquire Trump Media & Technology Group, owner of the Truth Social app. The former president is the chairman and a major shareholder of TMTG. But the deal between DWAC and TMTG has failed to come to fruition, as a shareholder vote on the transaction had been delayed several times before it ultimately failed in September 2022.
The controversial merger has also been stalled by legal scrutiny. The Justice Department is investigating the acquisition, in addition to the SEC. In late June, Digital World revealed its board members had received subpoenas from a federal grand jury in the Southern District of New York related to due diligence regarding the deal.
Digital World has said the federal probes have blocked the ability to get the deal with TMTG consummated. Despite shareholders’ rejection of the TMTG deal, the shell company said late last year it has been able to buy additional time because its sponsor, ARC Global Investments II, deposited nearly $3 million into the company’s trust account to exercise an option to unilaterally extend the merger agreement.
If that hadn’t happened, the entire deal could have unraveled, forcing Digital World to return the roughly $300 million it has raised. That money is intended to fund the merger with Truth Social owner TMTG. A liquidation would have also threatened the additional $1 billion the Trump media company has raised.