Good afternoon,

I'm William D. Cohan, the author of six books and a former M&A banker. Welcome back to Dry Powder, my private email about what's really happening on Wall Street. If you haven't yet had the chance, you'll need to subscribe to Puck to read my latest column in full.

In the meantime, please enjoy this free preview of Dry Powder, below, on the bizarre story of Donald Trump's new meme-stock merger and vaporware media company. And don't forget to download the latest episode of our new podcast, The Powers That Be, featuring my colleagues Peter Hamby, Matt Belloni, and Dylan Byers in conversation about Netflix's damage control campaign, the future of linear TV, the Politico-Axel Springer merger, and the succession drama at the Times. If you're enjoying what you're reading (and listening to) you can become a member here.

Inside the Trump Meme-SPAC Clown Car

As a business, the DWAC-TMTG merger is full of red flags: peripatetic sponsor, nonexistent product, outrageous valuation. But a mysterious bulk order, made just before the merger announcement sent the stock flying, may be the most telling market signal of all.

Just when you thought Donald Trump had no more outrageous tricks up his sleeve, he delivers his latest stunner: the proposed merger of a fantasy social media company—what he is calling Trump Media & Technology Group—with Digital World Acquisition Corp., a SPAC, or special purpose acquisition company, started in September by Patrick Orlando, a former JPMorgan & Co, Deutsche Bank emerging-markets derivatives trader, and Luis Orleans-Braganza, a member of Brazil’s National Congress, representing San Paolo. The 22-page investor deck, published on the TMTG website, promises a social media app to compete with Twitter and Facebook; a news and streaming platform to rival CNN and Netflix; and a “tech stack” to compete with Google Cloud and Amazon Web Services.

This one has stinker written all over it. But not to Trump’s adoring throng, who don’t realize they are being fleeced and can’t get enough of the opportunity to invest alongside a man who has already taken a handful of his other companies through bankruptcy court. Since the news of the merger between DWAC and TMTG broke on Wednesday, DWAC’s stock has gone from just under $10 a share—representing the net asset value where most SPACs seem to be languishing these days until they announce deals—to around $94 a share, an increase of around 850 percent in two days. (The DWAC stock spent a fleeting moment at $175 a share; pity the fools who bought at that price.) Time will tell, of course, but TMTG could turn out to be the most meme-y meme stock of all time, out-memeing AMC, GameStop, and Hertz for greatest meme stock ever.

So, just what the hell is going on here? Nothing good, that’s for sure. A little over a month ago, Orlando and Orleans-Braganza raised $293 million in the I.P.O. of DWAC. That’s pretty standard these days. So far in 2021, some 489 SPACs have raised more than $135 billion, according to SPAC Insider, a SPAC trade publication. DWAC is just one of many such shell corporations given a blank check by investors to try to seek out and close a merger. 

It turns out that Orlando, an M.I.T. graduate who is based in Miami, is a serial sponsor of SPACs with strange names...

FOUR STORIES WE'RE TALKING ABOUT