Shares of a SPAC linked to Trump's Truth Social — which had risen sharply last week — are down 8% after the former president's arrest

A SPAC linked to former President Donald Trump's media company has reversed previous gains.

Alex Brandon/AP

• Shares of Digital World Acquisition Corp, a SPAC, closed 8% lower at $14.03 on Tuesday.
• The SPAC has plans to merge with Trump Media and Technology Group, which owns Truth Social.
• The stock slumped just as former President Trump was being arraigned, and subsequently arrested.

Shares of a blank check company linked to former President Donald Trump were hammered just as he was arraigned and arrested on Tuesday.

Nasdaq-listed Digital World Acquisition Corp — a special purpose acquisition company, or SPAC, planning to merge with Truth Social holding company Trump Media and Technology Group — closed 8% lower at $14.03 on Tuesday after it announced a delay in filing financial statements.

The stock's performance on Tuesday is a sharp reversal from Friday when Digital World's share prices soared 11%, post Trump's formal indictment. Friday's rally could have been driven by speculation that the indictment would prove positive for Trump Media and Technology Group's business, Insider's Matthew Fox reported Friday.

Digital World's stock slump followed a Monday regulatory filing, where the SPAC said it wouldn't be able to file the 10-K form on time. Such forms give a comprehensive look into a public company's business and financials, allowing investors to see how it performed in the last year.

It further said its accounting staff needs more time to prepare the financial statements for the period ended December 31, 2022. Digital World expects to report a loss of at least $10 million for the year, per the filing.

The Securities and Exchange Commission, or SEC, hasn't approved Digital World's merger with Truth Social. The SEC has been probing the merger since November 2021 following reports that executives of both companies may have held deal talks before Digital World's initial public offering, which would violate SPAC regulations if proven true.

Since his indictment, Trump has been active on Truth Social.

On Tuesday, the former president posted 14 times on TruthSocial after his arraignment, criticizing the Manhattan district attorney's case against him and sharing the remarks he gave in the evening at his Mar-a-Lago resort in Florida. He also asked supporters to donate to his 2024 campaign, and reposted opinions of pundits who support him.

Trump is the first US president to be charged with a crime. He faces 34 low-level felony counts of falsifying business records, including at least one charge related to a hush-money payment his personal fixer and lawyer, Michael Cohen, paid to porn star Stormy Daniels just before the 2016 election.

The former president has pleaded not guilty to all charges, and has characterized the case against him as a witch hunt and an abuse of the judicial system.

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