Why did Digital World Acquisition Corp boom today? Because Musk ended his Twitter deal
Dimitrios Kambouris
Digital World Acquisition Corp. (NASDAQ:DWAC) shares soared 20% on Monday after Elon Musk said late Friday that he was terminating his deal to buy Twitter (NYSE:TWTR), prompting speculation that that Truth Social would get more attention.
Several analysts described the fact that Musk was terminating his $44B deal to buy the embattled social network, as a "nightmare scenario," especially with the looming legal battle.
Wedbush Securities analyst Dan Ives, who rates Twitter (TWTR) shares neutral and recently lowered his price target to $30, noted that the saga, of which today is Day 1, is likely to result "in an Everest-like uphill climb" for the company and its management as it deals with employees turnover, morale, advertising headwinds, investor credibility and a number of other issues.
"That said, this is going to be a long and ugly court battle (Twitter has already hired counsel) ahead in which the fake account/bot issue will be scrutinized for all to see and casts a dark cloud over Twitter's head in the near term," Ives wrote in an investor note, adding the legal issues could last well into next year. 
Twitter (TWTR) shares slumped more than 10% as investors digested the news.
Musk had previously said that Twitter (TWTR) would not ban people for life as it had done with former President Trump, who started the conservative social network, Truth Social, that is set to merge with Digital World Acquisition Corp. (DWAC).
In addition, Ives noted that the termination of the deal is also a "black eye moment" for Musk, given the way he handled the deal and has acted since it was announced. 
JMP Securities analyst Andrew Boone said there are now "two key questions" that have arisen from the news, including whether Musk is trying to walk away entirely and what chances does Twitter (TWTR) have in court.
Following the news of Musk's termination, it was reported that Twitter (TWTR) hired law firm Wachtell, Lipton, Rosen & Katz LLP as it prepares to sue Musk, who is also the CEO of Tesla (TSLA), over his termination of the $44B deal.
Last week, Truth Social denied a report that Donald Trump had removed himself from the Trump Media & Technology Group, just weeks before the company was issued federal subpoenas by the Securities and Exchange Commission.