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DWAC Warrant Terms | Trump Media SPAC | Digital World Acquisition Corp Warrants - YouTube
Channel: Wolves Of Investing
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Today we're going to be talking about聽
the DWAC warrants which rose over聽聽
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15000 percent from wednesday's close to its聽
peak on friday as you may have heard by now聽聽
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digital world acquisition corp ticker dwac聽
entered into an agreement and plan of merger聽聽
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with trump media and technology group on wednesday聽
on thursday the dwac stock and the warrants went聽聽
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crazy on the news breaking the former spac聽
record held by ev battery company quantumscape聽聽
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in this video i'm first going to give a high level聽
overview of what happened with the dwac warrants聽聽
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second i'm going to go over the current terms聽
of the dwac warrants such as how and when you聽聽
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can exercise them third i'm going to go over聽
my game plan for dwac all this right after
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i am not a financial advisor this video is for聽
entertainment purposes only learn to invest like聽聽
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a wolf at your own risk what's up everyone welcome聽
back to my channel wolves of investing my name is聽聽
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Donnie Nguyen and i'm the founder of wolves of聽
investing if you're new my channel is primarily聽聽
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about investing for growth if you want to learn聽
how to achieve financial freedom through investing聽聽
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be sure to click on the subscribe button and聽
notification bell if you haven't yet and please聽聽
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remember to drop a like on this video if you聽
enjoy it as it truly helps out the channel and聽聽
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be sure to check out my patreon if you want聽
to get more insights into my spac portfolio聽聽
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and my other growth oriented portfolios or if聽
you want to just support the channel and also聽聽
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be sure to check out my free discord to talk about聽
spax and other stocks with other members of the聽聽
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wolves of investing community so without further聽
ado let's get right into it so what happened聽聽
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on wednesday digital world acquisition corp聽
or dwac and trump media and technology group聽聽
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entered into a definitive merger agreement for聽
a spac business combination valuing the company聽聽
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at 875 million dollars with the potential聽
additional earn out of 825 million dollars聽聽
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in additional shares for a cumulative聽
valuation of up to 1.7 billion dollars聽聽
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depending on the performance of the stock price聽
post business combination the following day聽聽
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dwac stock went nuts opening at $12.73聽
and closing 400 percent higher at $52.00聽聽
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the day after on friday the stock gapped聽
up and reached a high of 175 dollars聽聽
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but the warrants which is what this video is about聽
did even more spectacular opening at three dollars聽聽
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and sixteen cents on thursday and reaching a聽
high of $79.22 on friday dwac warrants closing聽聽
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price on wednesday was just 51 cents so if you聽
held the warrants from wednesday's close and聽聽
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cashed out at the peak on friday your theoretical聽
gain would have been 15 433 percent in two days聽聽
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one thousand dollars would have turned into聽
155 000 dollars which would have been insane聽聽
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the warrants closed lower on friday at聽
$29.10 but that still would have been a聽聽
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gain of over 5600 percent now i realize it was聽
near impossible for anyone to have guessed that聽聽
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this would have happened before the announcement聽
and picked up warrants on wednesday but there was聽聽
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a one hour window on thursday morning where聽
the warrants could have been picked up聽聽
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for less than five bucks so congratulations to any聽
of you who were able to make that trade and cash聽聽
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out near the peak so what next i realize that many聽
of you may be new to warrants and wondering what聽聽
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can you do with the warrants and i made a spac聽
warrant basics for beginners video a while ago聽聽
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that covers many of the questions that my viewers聽
have asked so be sure to check out that video if聽聽
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you're interested but for this video i'm going聽
to summarize the current warrant terms of dwac聽聽
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based on their sec prospectus so the main thing聽
to know is that the dwac warrants are currently聽聽
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not exercisable yet which means that the only way聽
you can profit from the warrants when they begin聽聽
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trading again on monday is to just sell them as聽
you would a stock on brokerages such as fidelity聽聽
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or td ameritrade it's pretty simple i usually just聽
use a limit order to make sure that i'm getting聽聽
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the price that i want and on fidelity or td聽
ameritrade these are just commission free trades聽聽
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as many major brokerages offer these days on other聽
popular brokerages such as robin hood and webull聽聽
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you currently can't buy the warrants but聽
if you somehow got warrants in your account聽聽
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perhaps via a corporate action you should be able聽
to sell them you would want to contact your broker聽聽
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for specifics if you're unsure about any of this聽
as not all brokerages are the same i'm fairly聽聽
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certain that none of you watching this video have聽
the dwack warrants on either robinhood or weeble聽聽
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since there's no way you could have bought聽
them there but i realize that many of you聽聽
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coming from either of those platforms聽
are watching this video so just want to聽聽
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make sure i mention that so many of you may be聽
asking when do the warrants become exercisable聽聽
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like most specs the d-wack warrants don't become聽
exercisable until the later of 30 days after the聽聽
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completion of the initial business combination聽
and 12 months after the spac ipo so according聽聽
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to the current terms of the warrant you can't聽
exercise them until at least september of 2022聽聽
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since the spac ipo took place in september of 2021聽
now there is the possibility for dwack to change聽聽
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the terms of the warrants and i've usually only聽
seen this upon closing of the business combination聽聽
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so if you do plan on owning the warrants you聽
do need to be aware of this next what is the聽聽
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exercise price according to the current terms聽
like most backs the exercise price is $11.50聽聽
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so if that time comes in september of 2022 you聽
would just call your broker and tell them you want聽聽
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to exercise the warrant and in return for $11.50聽
and your warrant you'll receive one share of stock聽聽
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there's also something called cashless exercise聽
which is normally announced by the company聽聽
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if they change the warrant terms or redeem the聽
warrants early but that's currently not in play聽聽
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so when do the warrants expire this is always聽
tricky to explain to beginners so bear with me聽聽
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if the deal somehow gets called off the warrants聽
can expire worthless if the spac can't find聽聽
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another business combination by their deadline聽
which is september of 2023 assuming no extensions聽聽
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if the deal does go through and based on my聽
observation something like 90 percent of deals聽聽
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do go through then the warrants expire five聽
years after the initial business combination聽聽
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assuming the warrant terms don't change聽
and they don't get redeemed early which聽聽
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is what i'll talk about in a little bit and also聽
assuming that the company doesn't get liquidated聽聽
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and upon expiration the warrants go to zero聽
so how can the warrants get redeemed early聽聽
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early redemption is a normal feature of spax聽
and under the current terms of the warrant聽聽
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after the warrants become exercisable and with聽
30 days prior written notice of redemption to聽聽
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each warrant holder if the stock equals or聽
exceeds 18 for any 20 out of 30 trading days聽聽
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the warrants can be redeemed for one聽
penny per warrant so not exactly zero聽聽
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but it basically becomes worthless after聽
redemption so this is at least september of 2022聽聽
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and you would have 30 days to do something with聽
those warrants before they became worthless聽聽
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so if you happen to be holding these warrants聽
in september of 2022 and the stock is over 18聽聽
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then this is definitely something to be aware聽
of and again if you're unsure about the current聽聽
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terms of the warrant then you should contact聽
your broker and the investor relations office聽聽
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prior to the business combination it's the聽
investor relations office of the spac and after聽聽
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the business combination it would be the investor聽
relations office of the target company all right聽聽
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so now that we've gone through the current terms聽
of the d-wack warrants what is my game plan well聽聽
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i currently don't have a position unfortunately聽
but i'm going to stay on the sidelines for now聽聽
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the stock closed at four 94. and the warrants聽
closed at twenty nine dollars and nine cents聽聽
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typically the hype on these spacs die down聽
after the business combination and if i had聽聽
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to guess friday's high of 175 dollars for the聽
stock was probably the peak for this year but聽聽
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who knows this is a crazy market that we're in聽
what i'm really interested in is if this kicks off聽聽
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a new bull market for spec deals so i'm just going聽
to stay alert and look for some other similar聽聽
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deals that may garner a lot of hype and maybe聽
try to put in an early swing trade alright so聽聽
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let me know what you think about dwac and spacs in聽
general drop me a line in the comments be sure to聽聽
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leave a like on this video before leaving thanks聽
for watching and i will see you next time you
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