Trump-tied SPAC subpoenaed, Cathie Wood’s ARKK sees long inflow streak, Frontier stock slumps

Yahoo Finance Live examines several of today's stocks tied to trending industry stories, including Digital World Acquisition Corp. being subpoenaed by a New York grand jury and interrupting its merger with Truth Social, and Frontier and Spirit Airlines' stock action amid acquisition negotiations.

Video Transcript

[MUSIC PLAYING]

- Welcome back, everyone. It is time for our triple play. And my pick is ARKK Innovation ETF, ticker symbol ARKK. Now, the shares are down slightly today, just over about 2% down. Yeah, there they go, almost about 2 and 1/3% there. And that is reflecting some of the wider losses that we're seeing with tech stocks today.

Now ARKK's tech stocks actually make up nearly 40% of its holdings, led by Zoom, Tesla, and Roku, followed by its health stocks. But investors do seem to be keeping their faith in Cathie Wood's ETF as ARKK posted its longest streak of inflows in over a year.

Now, over the last eight days, investors poured $639 million into that ETF, according to Bloomberg. But the shares are still down more than 50% year to date. It's a far cry from that high we saw in February of 2021, when we actually saw assets go from $2 billion to almost $28 billion in less than a year.

Now, ARKK is known for taking these longer positions in some of these innovation-focused names. But when you have a raising right environment, you have tech stocks still getting hammered, it could be a very long uphill battle ahead. But a little glimmer of hope there with these inflows.

- Sounds like it, Rachelle. And it's interesting what Cathie Wood is doing. She's not changing her strategy. She's doubling down, like you said. She's been quietly adding to some of these beaten down positions, names like Roku, Coinbase, Zoom, among the names that she has been buying in recent weeks.

We know that Tesla is a top holder there. Tesla is one of their top holders in that fund. We actually have an analyst coming on later this hour who's saying that after the recent sell-off in Tesla, it presents a once in a generational, or a generational, I should say, investment opportunity in this stock.

So there are believers out there. Maybe we will see the return of some of these growth plays. But certainly, it looks like from those fund flows, there are investors out there who still believe in Cathie Wood, which shouldn't be a surprise to anyone out there.

Moving on to my play. And that is Digital World Acquisition. Now, this is a SPAC-- it might sound familiar to you-- that's tied to Trump's media and technology group. Shares taking a hit today. You can see the stock off just around 10% after disclosing a federal grand jury issued a subpoena to the company and board members.

Now, the subpoenas seek documents requested by the SEC last year, as well as S-1 filings and information regarding investment firm Rocket One Capital. Now the SPAC said that the subpoenas and investigations by the Justice Department and the SEC could potentially delay its planned merger with Trump's media company. Now, Digital World shares today are moving to the downside, off more than 50% since the start of the year.

So Dave, I don't know if we should say that this is a huge surprise that there are some, I guess, discussions here or some investigations into this company. But I think the big reason why we're even bringing this up is because it could actually potentially delay the merger with Trump's media company.

- You're being very kind.

- I am. I'm trying to be-- trying to be diplomatic here.

- This has been a bit of a dumpster fire from the very beginning. And you bring up the share price and the investigations on multiple levels. I looked for another measuring stick, which is how many followers did Donald Trump have on his own platform? Remember, he had 88.7 million on Twitter when he was kicked off.

He's at 3.7 million on Truth Social, which is a pretty good measuring stick. Another interesting aspect going on right now, the big thing he complained about is censorship, right, that he can't speak the truth on Twitter. Well, on this platform, there have been dozens of complaints in the past couple of weeks that people have been censored and kicked off of Truth Social for reporting about the January 6 hearing, so not exactly the free speech media platform they were looking for.

My play is Frontier Airlines, the symbol ULCC. Today, Frontier sweetened their offer for Spirit Airlines by $2 per share, their offer now $450 million in cash, $240 million paid upon a yes vote up front. Now, Frontier also raised its breakup fee to $350 million. And that matches JetBlue's proposed fee.

Spirit shareholders are set to vote on the revised offer at a special meeting on Thursday, said Frontier CEO Barry Biffle this morning. Quote, "This is clearly the right move for shareholders." Shares, however, were hammered today, Frontier down more than 11%. And Spirit is also falling more than 7%.

Another really interesting thing Barry said this morning, Rachelle, is that he thinks this offer, Frontier/Spirit versus Spirit and JetBlue, is better for customers, that it will lower prices. And his point was that the JetBlue acquisition would raise prices. And that's really something interesting to consider as we move forward.

- Well, Spirit's CEO Ted Christie clearly agrees. He weighed in, saying, "As this recovery progresses and demand returns, the price of the combined airline stock is expected to exceed the per-share price of JetBlue's fixed, all-cash offer. We urge stockholders to vote for the merger agreement with Frontier" prior to that June 30 special meeting that you were mentioning there. So it seems like everything seems to be going in that direction. So we'll just have to see what happens. Just a few days to go to find out.

- I don't know if I buy that it won't increase prices. Because whenever you see consolidation in this space, prices normally rise. So you would think that either deal would be bad news for the consumer, for the traveler.

- Well, I think the point that they're making is that Spirit is going to be acquired either way. And if you look at the JetBlue acquisition, that doesn't add another player to the game, whereas the point that they're trying to make is Frontier adding Spirit really adds a different major player into the game. I see what you're saying. Yes, you're right on the face of it. But one versus the other, probably a little better for consumers.

- All right, we'll see. I hope so. If that is the case, I don't know. Maybe that is the best news out there for everyone.