Each warrant is a promise that you can buy the stock for $11.50 after the merger. (Exercising the warrant.) I think you have to wait until 30 days after they merge.
But if the post-merge stock stays above $18 for 20 days, they can call in their warrants if they want, which sets a 30 day countdown timer before they disappear.
So if you aren't paying attention (or exercising them as soon as you can), you risk losing them.
So if, say, you spent $18.50 for a warrant. Then 30 days after the merger, you put $11.50 cash into your brokerage account. Then you call up the brokerage and tell them to exercise your warrant. This consumes the $11.50 and consumes the warrant, and gives you a stock. You'll have spent $30 total, even if the stock is $100.
However, exercising a warrant is considered a taxable event, and "ordinary taxable income". If the stock was $100 when you converted the warrant to a stock, the IRS will expect you to pay taxes on the $70 difference.
That's a pretty good summary of warrants I think. It's worth looking into how they work. In particular, these are SPAC warrants. (DWAC being a SPAC.)
I'd feel bad if it turned out to be the wrong choice for some weird reason. I often wonder if I'm falling for a trap with this one, haha
You buy warrants like a stock. It's DWACW.
When it comes to exercising a warrant, I believe you just put the $11.50 each in your account, and call up your broker and ask them to do that for you.
EDIT: I looked up why they are a low price, and it seems like I'm somewhat correct.
I forgot, it's 30 days after the merger that you can exercise the warrant!
The whole time this has been a meme stock, the warrants have costed far less than the normal stock. I'm new to all this too, but I see it as an opportunity to get in cheap and make more money in the long term. I love Trump and I think he's great, and I believe he can make this successful. So if I get in now, maybe I'll be rich later, haha.
I'm not sure why it's like that. Possibly due to the nature of SPAC startups. A SPAC exists solely to go public, be given a bunch of money by investors, and then bring a private company public by merging into it. The SPAC is just an empty shell company until it merges with a target.
Normally, SPACs carry a risk that that merger won't go through, and the money you invested will be wasted. Or maybe it'll succeed, but the post-merger stock will fall in value and it won't be worth $11.50 more.
But Trump supporters trust that he'll pull it off, haha.
That probably has something to do with why the warrants are cheaper than the stock. I'm guessing the stock is being gambled around (or HODL'ed) by people who want to make a quick buck on it because it's a meme stock. If you're long term and you think the merger will succeed and the venture will succeed, then warrants are a cheaper way to bet on the longer term.
After the merger between DWAC and TMTG, DWAC stocks and warrants will become TMTG stocks and warrants. Before the merger, the warrant is just a promise. You can't convert it into a stock until after the merger happens. So if you're holding a warrant, you're really just holding a promise that you can buy the stock later (after the merger) for $11.50.
No, it's just: Pay whatever it is now. Then when the companies merge and it becomes a TMTG warrant, you pay $11.50 to turn it into a stock.
All that other stuff is basically just: If you forget that it exists and come back in a few years, your money will be gone, so just exercise it when they merge, haha.
Each warrant (DWACW) is a promise that you can buy the post-merger stock for $11.50
So you buy a warrant, hold onto it until the merger (Where DWAC becomes TMTG), then you put $11.50 of cash per warrant in your account. Then call your broker and tell them to exercise your warrants. This will consume the $11.50 per warrant and transform them into normal stocks.
It's a way of incentivizing people to invest long-term I guess, instead of just day trading it.
Each warrant can have different rules that its company set up, but here's the catch for ours in particular (DWACW): If the post-merger stock (TMTG) stays at $18+ for 20 days straight, then they have the right to "call in their warrants". If they call them in, it starts a 30 day countdown until your warrants become worthless and disappear.
So if you're going to hold warrants, you gotta keep up with the news on what the company is up to. To play it safe, I'm just going to exercise them as soon as I can.
Here's another catch: Exercising your warrants is an "ordinary taxable income" event.
The stock price - $11.50 - what you paid for the warrants = the taxable income. Yes, the government considers you to be making money when you exercise a warrant and convert it into a stock.
There's another type of stock you might have seen: Units, or DWACU.
Units are also different from company to company, but they typically contain one stock and part of a warrant.
In our case, each DWACU contains 1 DWAC and 1/2 of a DWACW.
Units can be "split" by calling your broker and telling them to split your units. But you can't redeem a partial warrant. So you'd make sure you have an even number of units before you split them. This converts every 2 DWACU into 2 DWAC and 1 DWACW.
Yeah it's complex, haha!
I'm skating by almost paycheck to paycheck dumping what I can in DWACW's. I've been getting them because they're so cheap and will save you the most in the long run.
If you're long on TMTG, just make sure you understand the implications of getting the warrants.
You'll have to put up $11.50 more each to convert them to stocks, and if Trump is in a rush to call them in, you'll have like 50 days from merger to pull it off.
Here's why: If stock is $18+ for 20 days straight (which will definitely happen at this point, lol), then they can call in warrants. If they call in the warrants, you have 30 days until the warrants disappear.
When you exercise them and convert them to stocks, this action is counted as ordinary taxable income. The stock price, minus what you spent for the warrant, minus what you spent to convert the warrant to a stock, is taxable income.
Lol, that's a name I thought I'd never see here.
He (Keith Weiner) is apparently an Objectivist (an Ayn Rand follower. So am I), but he was so full of TDS during Trump's presidency, constantly sneering down his nose at Trump and "the alt right" and getting triggered if you tried to call out the left's evil.
The alt-right objectivists called me an obleftivist! (Therefore if you call me an obleftivist, you must be an alt-right.)
-Keith Weiner basically.
If you get into an argument with him over the coup against Trump or big tech censorship, he'll block you for using those words to describe those things.
Real life stock market kinda does this too.
Wild price swings just straight up makes trading stop for a while to give everyone some breathing room.
All the newbs (including myself) thought this was the establishment manipulating the market trying to stop us from sticking it to them, lol.
I'm just running on the assumption that SPACs have to find a company to merge with, or the SPAC dissolves. The merger having a deadline that they have to follow through by suggests that too.
The SEC is investigating DWAC, with their reasoning being that Trump and DWAC may have colluded from the beginning for TMTG to be who DWAC merges with, and not DWAC organically searching for a merger. While investigating, the SEC is just refusing to let them go through with their merger.
Since they hate Trump and those who support him, it only seems logical that they're stonewalling the merger until time runs out.