Shares in shell company taking Trump’s social media startup public briefly soar 21%

Digital World Acquisition Corp., a special purpose acquisition company that struck a deal in October to bring Trump Media & Technology Group into the public markets, rose as much as 21% in early trading Thursday before paring most of those gains. As of 1:02 p.m. ET, the company shares were up 2.25% to $45.35.

The surge followed a Reuters report that Trump Media & Technology Group, which has yet to launch its Twitter-like app TRUTH Social, is looking to raise up to $1 billion in additional funding. As part of such an investment, the venture’s valuation would rise to nearly $3 billion, according to the report, up from a previous $875 million valuation, including debt.

Spokespeople from Trump Media & Technology as well as Digital World Acquisition did not immediately respond to Fortune‘s requests for comment on the report.

In the six weeks since the Trump Media & Technology Group and Digital World Acquisition deal was announced, the SPAC’s shares have been on a wild ride similar to the meme stock moves throughout the U.S. equity markets in 2021.

On Oct. 21, the first day of trading after news of its Trump combination plans broke, Digital World Acquisition’s shares spiked more than 400% in intraday trading and ended the day up more than 350%. The next day, it continued on its tear, with shares at one point trading in excess of $150, a more than 1,400% increase from where they had traded ahead of the deal.

Digital World Acquisition’s stock has since tumbled from its heights—as interest in the deal waned and critics raised new questions about the transaction, and, in particular, its timing.

SPACs are effectively skeleton companies that are designed to reverse merge with a private company, which then takes over the SPAC’s public stock listing. The structure was in vogue during the first quarter of 2021, partly because it offers a faster and less cumbersome route to the public markets than an initial public offering. Still, SPACs must meet certain requirements. In particular, U.S. securities laws prohibit SPAC sponsors—that is, the people who launch them—from engaging with potential merger targets until the SPAC has gone public. The SPAC’s IPO then kicks off what is usually a two-year shopping window for it to find a merger target. If it doesn’t, the SPAC can either ask for more time or liquidate.

And surely enough, the week after Trump brought his vision for a new social media empire to light, The New York Times reported that Digital World Acquisition’s chief, Benessere Capital CEO Patrick Orlando, had been in talks with Trump about bringing Trump Media public with a SPAC months ahead of Digital World Acquisition’s own debut.

Investors in the SPAC have since dumped shares in Digital World Acquisition, whose stock was trading north of $70 ahead of the Times‘ report. But retail investors, in particular, have stayed with it, making the stock the eighth-most traded among Fidelity customers on Thursday, according to the brokerage’s data.