Digital World Acquisition (NASDAQ:DWAC) stock is back on the upswing. Digital World is a special purpose acquisition company (SPAC) that intends to merge with former President Donald Trump’s social media company, the Trump Media & Technology Group or “TMTG”.

DWAC stock spiked from $10 to above $100 at one point following the  announcement of its deal with TMTG. Since then, DWAC stock had, until this week, been steadily retreating as traders awaited further catalysts.

That’s not surprising; SPACs have been ice cold in recent months, after all. And given the relatively sparse information out there about Trump’s media company, DWAC stock has traded largely on sentiment rather than deep, fundamental analysis.

On Wednesday afternoon, however, Digital World swung back into motion. The shares exploded 27% higher in the after-hours session as the company knocked one big obstacle out of the way. However, the shares closed up just 6% yesterday.

Digital World Gets Its Cash

In my most recent column on DWAC stock, I  warned traders to be cautious with the shares until the SPAC finishes its fundraising efforts. That issue was a big overhang on the price of DWAC stock, since few people want to buy the shares of a company ahead of a potential secondary stock offering.

Around the end of the market’s trading day on Wednesday, however, Reuters reported that Digital World was close to finalizing its fundraising efforts. And, incredibly, it appears  that Digital World’s most recent fundraising was conducted at a much higher valuation than previously.

In its initial deal with TMTG, Digital World valued Trump’s company at $875 million, including debt. Now, though, Reuters reports that TMTG will raise money from hedge funds and private offices at a valuation of nearly $3 billion.

That’s a massive jump, and the increase shows that Digital World and TMTG were able to use the success of DWAC stock to garner a far higher valuation from private investors.

A Big Win

If you’re not too familiar with SPACs, Digital World’s sale of more stock at around $40 per share may not that shocking. After all, DWAC stock was trading at $41 per share prior to this news, so the deal was in-line with its market price at the time.

However, SPAC private investment in public equity (PIPE) offerings are almost always made for $10 per share or close to that price. It’s very rare for the sponsor of a SPAC to receive more than $10 per share in its initial PIPE deal. Even in extraordinary circumstances, SPAC usually don’t receive much more than $10.

Lucid Motors (NASDAQ:LCID), for example, despite being one of the year’s hottest SPAC deals, concluded a $15 PIPE offer when its SPAC had been trading at $55.

Digital World was expected to receive $20 per share or even less. It’s generally been very hard to turn a lofty SPAC stock price into reality this year. That’s been particularly true lately, as SPACs have been utterly imploding.

So it’s nearly impossible to overstate what an accomplishment this recent transaction was for Digital World and TMTG. In just a matter of weeks, they’ve gotten the valuation of DWAC stock up from $875 million to several billion dollars.

They’ve also apparently gotten quality investors, such as hedge funds, to buy shares at that price. That’s not bad for a newly formed media company which some analysts said was little more than a publicity stunt.

The Twitter Angle

There’s been an interesting development recently at Twitter (NYSE:TWTR). Its longtime CEO, Jack Dorsey, recently announced that he is stepping down from that role.

This is understandable; Dorsey is a busy man, since he is also the CEO of Square (NYSE:SQ). Still, Dorsey’s exit from Twitter may change the social media sector a great deal. Twitter has long struggled to monetize its popular platform. And the firm’s new CEO is an engineer who some have suggested may be a caretaker who will only lead the company until it can sell itself.

That said, under its new leadership, Twitter has already announced changes — such as blocking the posting of private information — that may make the platform less open to some content. Trump’s social network, by contrast, has promised to be very tolerant to all of its users, regardless of their political beliefs.

If Twitter cracks down on its more controversial users, it could create a strong incentive for users to check out alternatives, including TMTG.

The Verdict on DWAC Stock

It’s hard to estimate the precise value of Digital World at this time. We don’t even know what its social media platform will ultimately look like yet, let alone how many users it will attract.

That said, this PIPE deal represents a massive vote of confidence in the venture. If hedge funds are willing to pony up $40 per share to own part of TMTG, there’s a good chance that its business is worth at least that much today, if not more.

Combine that with short sellers getting stuck on the wrong side of a fast-moving stock, and Digital World could climb much higher in the coming days and weeks.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.