Shares of Digital World Acquisition Corp (DWAC) surged over 4% to $37.36 in morning trading on Tuesday after Twitter announced accepting the private deal with Elon Musk. DWAC is the Special Purpose Acquisition Vehicle (SPAC) poised to take former President Donald Trump’s Trump Media and Technology Group (TMTG) public to the stock exchange. 

The DWAC stock had declined 12.9% on Monday, bringing its year-to-date losses to over 30%. The special purpose acquisition company will soon merge with the Trump Media and Technology Group.

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The media company includes a social media platform called Truth Social. In January 2021, when Trump was banned from Twitter and Facebook, it raised the potential market share for his Truth Social App. Trump’s platform is being seen as an alternative to social media giants Twitter and Facebook. With Trump having a huge following on Twitter and a huge fan and voter base, Truth Social was set for a solid launch. But the new platform has had a very unlikely start due to technical glitches and the departure of key executives.

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However, now it seems that Musk sees Twitter as a more open platform and is less likely to ban people from it. This definitely makes it more of a threat to Truth Social and DWAC stock.

On Monday, DWAC stock saw a heavy sell-off after the news broke out that Twitter’s board accepted Elon Musk’s offer to buy the social media company and take it private for $54.20 per share or $44 billion. Musk said he will change the platform’s policies on censorship, and enhance the product with new features and the algorithms open source to enhance trust.

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Trump told Fox News that he will not return to Twitter even if Musk’s deal goes through. He added that he will start using his own company’s app. Trump has made only one post on Truth Social since its launch.

Despite a weak 2022, shares of DWAC have surged more than three times in value since its September launch at $10 per share. 

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DWAC is a Special Purpose Acquisition Vehicle (SPAC), which is an IPO alternative vehicle that brings companies public to the stock exchanges on a faster timeline. SPACs are formed to raise capital with the target of identifying other companies to merge with and take it public within two years.

Earlier this month, Reuters reported that Truth Social’s chief technology officer Josh Adams and head of product development Billy Boozer had resigned.

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Last week, Hedge fund Kerrisdale Capital Management said in a tweet that it is shorting DWAC as it believes the SPAC will never secure regulatory approval to close its proposed merger.

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FIRA) launched investigations against DWAC in December regarding stock trading and communications with Trump’s company before the merger was announced.