Key Highlights

● Rising Dragon Acquisition has continued giving back gains from an April surge above $21, most recently closing at $6.65, down 24.26%.

● At a November 2025 vote, holders of 5,715,609 shares redeemed for cash, sharply shrinking the tradable float and leaving the stock prone to violent swings on modest volume.

● The company is pursuing a Merger with HZJL Cayman Limited to form Xpand Boom Technology, with a Shareholder vote held May 28, 2026, to extend the deal deadline as late as October 15, 2027.

● Several hedge funds, including Karpus Management, Polar Asset Management, Wolverine Asset Management, and JPMorgan Chase, had fully exited positions by the fourth quarter of 2025.

Rising Dragon Acquisition Corp. (NASDAQ:RDAC) is not an operating Business but a special-purpose acquisition company, or blank-check firm, formed to merge with a private company and take it public. It raised roughly $50 million in its October 2024 initial public offering, selling five million units at $10 each, with the trust reaching about $57.8 million after the over-allotment and a private placement. Like many SPACs that have lingered without closing a deal, RDAC has become a vehicle dominated by trust Economics and, increasingly, by extreme share-price Volatility driven by a shrinking pool of tradable stock.

That volatility is the essential context for RDAC's appearance among notable decliners. Earlier in 2026, the stock experienced a dramatic squeeze, surging more than 350% on 29 April to an intraday high above $21 and trading in a wide band on heavy volume, at times triggering limit-up/limit-down volatility halts. Analysts characterized that spike as a low-float volatility event rather than the product of any new fundamental announcement. When a stock rises that violently on thin supply, it tends to give much of the move back, and sharp declines from elevated levels are a routine feature of such names. A drop in RDAC therefore often reflects the mechanics of a thin-float SPAC unwinding a prior spike rather than fresh bad news about the underlying deal.

The HZJL merger and the extension clock

Most recently, shares closed at $6.65, down 24.26%, continuing to give back the April spike. RDAC's proposed transaction is a merger with HZJL Cayman Limited, a company that provides branding, software solutions, and supply-chain support to local lifestyle venues such as restaurants, coffee chains, and beauty salons. The combined entity would be named Xpand Boom Technology, with HZJL shareholders set to receive about 35 million ordinary shares and potentially up to 20 million additional earn-out shares if Revenue targets are met.

Much of RDAC's recent corporate activity has revolved around buying time to complete that deal. On 29 April 2026 the company announced it was seeking an extension of its business-combination deadline, and it scheduled a shareholder meeting for 28 May 2026 to vote on extending the deadline from 15 July 2026 out to as late as 15 October 2027 through a series of one-month extensions. To fund each monthly extension, the sponsor deposits into the trust either $100,000 or $0.033 per outstanding public share, whichever is lower, as a non-interest-bearing loan. These extension mechanics are common among SPACs approaching their deadlines, and they keep speculative interest alive around whether and when a deal will actually close.

Redemptions have hollowed out the float

The single most important structural Factor behind RDAC's wild swings is redemptions. At a November 2025 approval vote, holders of 5,715,609 shares chose to redeem, exchanging their stock for a pro-rata share of the trust rather than remaining in the deal. That is the mechanism SPAC investors use to get their cash back, and it dramatically reduced the number of shares available to trade. With so much of the float removed, even modest buying or selling pressure can move the price violently, which is exactly what produced the spring squeeze and the subsequent sharp reversals.

Institutional behavior reinforces the cautious read. By the fourth quarter of 2025, several Hedge Funds had exited their positions entirely, with reports citing full liquidations by managers including Karpus Management, Polar Asset Management, Wolverine Asset Management, and JPMorgan Chase. SPAC arbitrage funds routinely hold shares to capture the trust value and then redeem or sell around key votes, so these exits are consistent with typical arbitrage strategy as much as any specific judgment on the merger. Still, the combination of a thin float and departed institutions leaves the stock's price discovery in the hands of a small, momentum-driven trading base.

Why the catalyst is hard to pin down

Here it is important to be candid about the limits of what can be confirmed. The available reporting documents the April surge, the Redemption history, the extension vote, and the HZJL deal structure, but does not identify a specific, verifiable news event tied to a decline around 21 August 2026. In the absence of a fresh disclosure, a filing, or a deal update pointing to a defined trigger, the most defensible characterization is that the precise catalyst for the recent drop has not been definitively established. The behavior is fully consistent with a low-float SPAC reverting after a speculative spike, but that is a structural explanation rather than a confirmed event-driven one, and the two should not be conflated.

For a SPAC, the fundamental value anchor is the cash in trust, which typically translates to a per-share redemption value near the IPO price plus accrued interest and extension deposits. When a SPAC trades far above that trust value, as RDAC did during its squeeze, the excess is speculative and inherently fragile. A decline back toward, or even below, prior levels does not necessarily reflect deterioration in the business prospects of the target; it can simply reflect air coming out of a price that had detached from the underlying trust economics.

What to watch next

The clearest signposts ahead are procedural and deal-related. Investors will watch for further extension deposits and votes, for progress toward a definitive completion of the HZJL merger and the transition to Xpand Boom Technology, and for any additional redemption activity, which would further shrink the float and could amplify volatility. Any updated proxy materials or regulatory filings would also carry outsized importance for a name where information is sparse and trading is thin.

More broadly, RDAC illustrates the specific risks of investing in late-stage SPACs: heavy redemptions, uncertain deal timelines, sponsor-funded extensions, and share prices that can swing far from the trust's underlying cash value on light volume. For anyone trying to interpret a sharp move in the stock, the structure itself is often the story. Until the merger either closes or is abandoned, RDAC is likely to keep behaving less like an Investment in a defined business and more like a speculative instrument governed by float mechanics and the ticking extension clock.