What happened

Shares of Digital World Acquisition (DWAC) sank 38.9% in November, according to data from S&P Global Market Intelligence. The special purpose acquisition company (SPAC) backed by Donald Trump saw its share price tumble amid bearish pressures hitting the broader market.

DWAC Chart

DWAC data by YCharts.

Digital World Acquisition announced in October that it had entered into an agreement to merge with Trump Media & Technology Group, and take the company backed by the former U.S. president public in the deal. The company's share price skyrocketed following the merger announcement, so it's not particularly surprising that it lost substantial ground as investors shied away from high-risk stocks last month.

A chart line moving downward in front of a $100 bill.

Image source: Getty Images.

So what

The merger is set to see the combined company operate under the Trump Media & Technology Group (TMTG) banner; the transaction valued TMTG at a base level of $875 million, and up to $1.7 billion, based on the performance of the stock following the completion of the merger. TMTG's business is set to revolve around TRUTH Social -- a social media platform that is intended to serve as a "rival to the liberal media consortium and fight back against the 'Big Tech' companies of Silicon Valley," according to recent filings with the Securities and Exchange Commission (SEC).

After skyrocketing roughly 581% across October's trading, Digital World Acquisition's valuation retreated as the market became more cautious about high-risk stocks. There wasn't much in the way of business-specific news driving the SPAC company's share price lower last month, but bearish catalysts including rising Treasury bond yields and the spread of the omicron coronavirus variant prompted investors to move out of the stock.

Now what

Digital World Acquisition stock has regained some ground in December. The company's share price is up roughly 6.7% in the month so far:

DWAC Chart

DWAC data by YCharts.

Trump Media & Technology Group's TRUTH Social platform is currently in an early rollout phase, and is expected to make its nationwide debut in the first quarter of next year. TMTG announced on Dec. 4 that it had secured roughly $1 billion in investor funding for its social media business, which has helped send Digital World Acquisition's share price higher early in December.

The combination of Digital World Acquisition and Trump Media & Technology Group will likely be completed in the near future. It's possible that the new social media venture backed by Donald Trump will be able to attract a sizable, highly engaged user base. But investors should understand that the industry is quite competitive and the business outlook remains uncertain.