DWAC, the Trump Social-Media SPAC, Surges: What to Know

What is DWAC?

Digital World Acquisition Corp.

DWAC 126.37%

is a special-purpose acquisition company, or SPAC. It is essentially a pot of money raised from investors with the intention of finding a private company to buy. In this case, DWAC completed its initial public offering in September.

Hundreds of SPACs have been launched in the past two years, tapping into two market trends: investor enthusiasm to buy anything, and a flood of private startups looking to hit the public markets.

Why is DWAC going crazy?

This SPAC was up sharply from its listing price earlier Friday. The stock is surging in part because it is linked to one of the major figures on social media, former President

Donald Trump,

and this seems to have spurred a wave of individual-investor interest. The firm is also promoting itself as having a large market opportunity in presenting an alternative to what it views as the liberal-minded media establishment.

How is Donald Trump involved?

Unclear. He is listed as chairman (a notoriously vague corporate title) of Trump Media & Technology Group, the newly formed company that is merging with DWAC and that has plans to launch a conservative-leaning social network called Truth Social.

Who Is Patrick Francis Orlando?

While plenty of well-known corporate and political insiders have launched SPACs, such as former

Goldman Sachs Group Inc.

President

Gary Cohn

and former

Honeywell International Inc.

Chief Executive

Dave Cote,

Patrick Orlando

isn’t among them. According to securities filings he is the chief executive of Benessere Capital, a Miami investment firm he founded in 2012. His first SPAC,

Yunhong International,

went public earlier this year and signed a deal to acquire energy transportation solutions company Giga Energy, but that deal was called off in September.

What is Truth Social?

The

Twitter

-like platform—users can post “truths” and “re-truths”—is one leg of a planned media empire that would compete with the likes of

Netflix

and CNN, according to a company presentation this week. The presentation doesn’t make it clear when the planned platform would go live.

This article may be updated.

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ

Write to Liz Hoffman at liz.hoffman@wsj.com