NEW YORK – Shares in a company planning to buy Donald Trump's new social media business plunged Monday on a news report that two key staff members left, deepening losses from last week when it said it would miss a deadline to file its annual financial statements.
Digital World Acquisition Corp. closed Monday down 10% following a Reuters report that the chief technology officer and chief products officer had left the company, citing two anonymous sources. Neither executive responded to requests for comment by The Associated Press, but a person close to the company speaking on condition of anonymity because he was not authorized to talk confirmed the two had left.
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It was not immediately clear why the head of technology, Josh Adams, and the product chief, Billy Boozer, decided to leave, 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 stating that its accountants needed more time to review financial figures before filing its annual report.
Many public companies request filing extensions, but the news added to investor jitters fueled by the botched February launch of Trump's Truth Social app, which was marred by outages and long wait lists to gain access.
As of Monday, nearly 1.5 million potential subscribers were waiting for access.
The stock rocketed past $100 last fall after Digital World announced it planned to buy Trump's company, Trump Media & Technology Group, the developer of the Truth Social app.
Shares in Digital World ended Monday at $56.94, down more than a third over the past month.
Last week, Trump's two adult sons began posting on the platform. “Feels the whole gang is back together!” Eric Trump wrote. The same day, Don Jr. posted, “Who's ready for some truth!”
But the biggest attraction for Truth Social, the ex-president, hasn't posted anything after writing more than month and half ago, “Get Ready. Your favorite president will see you soon!”
The Truth Social app topped Apple’s App Store free rankings on the day it was made available to a limited set of subscribers in February. Since then, it has tumbled down the charts and is no longer in the top 200.
Another possible problem for Digital World is funding its operations. Trump managed last year to get dozens of investors to agree to put $1 billion into the business once Digital World combines with Trump Media, but that hasn't happened yet.
Digital World is still waiting for regulators to sign off on the deal, which is no sure thing. The company said last year that the Securities and Exchange Commission is investigating Digital World following reports it may have broken security rules last year.
Digital World is a so-called blank check company, a empty entity set up with the sole purpose of buying an operating business that is allowed to offer stock to raise money without much public disclosure because it doesn't have a clear idea what it will buy yet. News reports last year said Digital World and Trump’s company had conversations about a merging before Digital World stock began trading, in possible violation of the rules.
The company has said it its complying with the probe. Trump has dismissed the regulatory scrutiny as a politically motivated “witch hunt.”
Despite the Digital World stock plunge Monday, the price still values the company at more than $2 billion, surprisingly high for a business with virtually no operating history or publicly available financial figures.