Much like a federal lawmaker seeking safety inside the US Capitol on January 6, GameStop GME, -6.55% and AMC Entertainment AMC, -6.73% are wondering where all of their supporters are now that the MAGA crowd has knocked down the door.
Both of the biggest names in meme stocks closed down on Friday with GameStop falling 6.5% and AMC giving up 6.7% as retail investors turned their attention to two new names that have used connections to former president Donald Trump to grab the meme stock spotlight.
Digital Worlds Acquisition Corp. DWAC, +107.03% and Phunware Inc PHUN, +471.24% soared 107% and 471.2% respectively after Wednesday’s announcement that Trump will take his new Trump Media & Technology Group public via a SPAC deal with Digital Worlds.
While the deal is not done, DWAC shares finished the week up 846.7% on assumptions that the deal will close and Trump will come through on TMTG’s rather obscure promises to upend media establishment forces like Twitter TWTR, -4.83%, Facebook FB, -5.05%, Apple Inc. AAPL, -0.53%, and Google GOOGL, -3.04%.
Trump’s venture is predicated on a social media app called TRUTH which has already been hacked to show close-up videos of pigs pooping on themselves on an account linked to Trump himself. It remains to be seen if social media platforms owned by Twitter, Facebook, Apple or Google will give his new app air which seems unlikely.
But even if they don’t accommodate a new venture from a man banned by 50% of those corporations for his role in the January 6 insurrection, Trump and his team can also not rely on Amazon AMZN, -2.90% to give his venture life on its Amazon Web Services crowd.
And that’s not even taking into account the fact that Digital World’s CEO, Patrick Orlando, who is also the chief executive of a SPAC called Yunhong International ZGYH, +2.92% that is based in Wuhan, China, bought more than $ 11 million worth of Digital World shares in September, weeks before the deal with TMTG was announced.
That timing is likely to come under the scrutiny of SEC chief Gary Gensler who critics say has been a little slow to move on the regulatory issues surrounding meme stocks, but could be persuaded to review the venture of a former president who is currently fighting Congress on using his Oval Office correspondence to learn more about January’s insurrection.
There could also be good news in Digital World’s gains for Trump’s critics.
Trump’s former aide and Skybridge Capital’s founder Anthony Scaramucci said Friday that he hopes a successful SPAC merger could keep Trump from running for president in 2024.
However, Digital World CEO Orlando could clarify some things soon. After being called out for not really giving any information about its business model, Digital World could get around to filing something with the SEC explaining itself late next week, Orlando told Reuters on Friday.
Meanwhile retail traders might have fueled the rallies on the MAGA meme stocks, but they got support from a source they might not want to acknowledge: hedge funds.
Saba Capital Management and Lighthouse Investment Partners reportedly dumped large stakes in DWAC when the stock soared after the deal with Trump was announced.
At one point Friday afternoon, the volume on DWAC showed that each share could have been traded 3.5 times in the last 2 days.
And as for Phunware, well it might benefit from TMTG because it’s worked with Trump in the past.