Analysis-From zero to $12 billion; investors chase Trump stock hype

By Krystal Hu and Anirban Sen

(Reuters) – Donald Trump has united some of his supporters and detractors in buying shares in his new company and hoping to score a big win.

Anthony Nguyen, a 49-year-old software consultant from Austin, Texas, is a Republican who refused to vote for the former U.S. president in last year’s election.

Last week he joined the millions of online day traders who drove up the value of the company that will house Trump’s new social media venture to almost $12 billion. The company’s app has yet to be rolled out even on a trial basis, and Nguyen said he invested because he wanted to make a quick profit, not because he believed in the business.

“Is Trump’s social network going to work out? Probably not. But that doesn’t mean you can’t make money in the meantime,” Nguyen said.

Shares of Digital World Acquisition Corp have risen 842% since the blank-check acquisition company announced on Wednesday it would merge with Trump Media & Technology Group, which aims to launch a social media network called TRUTH Social.

Trump Media was worth $8.2 billion based on the closing price of Digital World shares on Friday, while the company that would be created with the merger would have a close to $12 billion valuation. This assumes Digital World valued its shares in the deal at $10, as is customary for special purpose acquisition companies (SPACs). A detailed regulatory filing that will allow a precise calculation is expected this week.

Many of the investors snapping up the shares are political supporters or fans of Trump. Shane Springer, a 28-year-old salesman from Norristown, Pennsylvania, is holding on to the $1,300 worth of stock he bought on trading app Robinhood (NASDAQ:) last week until it goes “to the moon”. He bought the shares for $13 and refused to sell even when they reached a high on Friday of $175.

“Trump has a strong history of making people a lot of money and winning. If this was an election I would have lost, but it’s not, it’s business,” Springer said.

Nguyen, on the other hand, said he invested in the SPAC because he saw similarities with GameStop Corp (NYSE:), the video game retailer whose shares skyrocketed in January after an army of retail investors on Reddit and other social media platforms took on hedge funds betting against the company. The retail investors also piled into other “meme” stocks, from movie theater operator AMC Entertainment (NYSE:) Holdings Inc to home supplies retailer Bed Bath & Beyond Inc (NASDAQ:).

Unlike GameStop and some other meme stocks, Digital World is a SPAC whose shares were not under pressure from hedge funds shorting them. But Nguyen said he detected the same exuberance for the Trump deal among retail investors.

He bought $4,100 worth of Digital…