By BERNARD CONDON and TALI ARBEL – Associated Press
NEW YORK (AP) — Shares of a company planning to buy Donald Trump’s new social media business plunged Monday after a news report that two key employees have left, deepening last week’s losses when it said it would miss a deadline for filing its annual financial statements.
Digital World Acquisition Corp. closed down 10% on Monday after Reuters reported that the chief technology officer and chief product officer had left the company, citing two anonymous sources. Neither executive responded to requests for comment from The Associated Press, but a person close to the company, who spoke on condition of anonymity because he was not authorized to speak, confirmed the two had left.
It wasn’t immediately clear why chief of technology, Josh Adams, and chief of product, Billy Boozer, decided to leave the company, but the staff turnover comes at a bad time for the company as it struggles to attract subscribers.
The departures follow a filing by the company last week that said its accountants needed more time to review financials before filing their annual report.
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Many listed companies are requesting filing extensions, but the news added to investor nervousness, fueled by the botched launch of Trump’s Truth Social app in February, which was marred by outages and long waiting lists for access.
As of Monday, nearly 1.5 million potential subscribers were waiting for access.
The stock soared above $100 last fall after Digital World announced it plans to buy Trump’s company, Trump Media & Technology Group, developer of the Truth Social app.
Digital World shares closed at $56.94 on Monday, down more than a third over the past month.
Last week, Trump’s two adult sons began posting on the platform. “Feels like the whole gang is back together!” Eric Trump wrote. That same day, Don Jr. posted, “Who’s ready for some truth!”
But the biggest attraction for Truth Social, the ex-president has not posted anything after writing more than a month and a half ago: “Get ready. Your favorite President will see you soon!”
The Truth Social app topped Apple’s free app store rankings on the day it was made available to a limited number of subscribers in February. It has since crashed on the charts, failing to make the top 200.
Another potential problem for Digital World is funding its operations. Trump managed to get dozens of investors to put $1 billion into the deal last year once Digital World merged with Trump Media, but that hasn’t happened yet.
Digital World is still waiting for regulators to sign off on the deal, which isn’t a sure thing. The company said last year that the Securities and Exchange Commission is investigating Digital World after reports it may have violated security rules over the past year.
Digital World is what is known as a blank check firm, an empty entity formed for the sole purpose of buying an operating company that is allowed to offer stock to raise money without much disclosure because it has no clear idea of what it is do will still buy. According to news reports last year, Digital World and Trump’s company had been in merger talks before Digital World’s stock began trading, which may be against the rules.
The company has said it is complying with the probe. Trump has dismissed the regulatory check as a politically motivated “witch hunt.”
Despite Digital World’s stock market plunge on Monday, the stock still values the company at more than $2 billion, surprisingly high for a company with virtually no operating history or publicly available financials.
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