Over the weekend, a story broke that will likely be the final nail in the coffin for Digital World Acquisition Corp (NASDAQ:DWAC). Weeks after taking over Twitter, Elon Musk allowed Donald Trump to return to the platform. DWAC stock has been plunging since then, and it isn’t likely to rebound.
Following the insurrection on Jan. 6, 2021, Twitter removed the former president’s account on the grounds he had used it to incite violence. Last week, in typical Musk fashion, the company’s new leader ran a Twitter poll asking users if he should reinstate Trump’s account. When 51.8% of the 15 million respondents voted yes, Musk tweeted the platform would reinstate Trump’s account. But if he returns to Twitter, Trump will inadvertently kill Truth Social.
How is Trump responding to the news? Reuters reports that the former president has expressed no interest in returning to Twitter. “I don’t see any reason for it,” he stated when asked over the weekend. Even while the former president remains aloof, DWAC stock is still plunging. Regardless of whether he returns to Twitter, Digital World Acquisition Corp is still in a race to the bottom. Let’s take a look at why no action from Trump can save it.
Donald Trump Can’t Save DWAC Stock
As of this writing, DWAC stock is down 5% for the morning. While it spiked in early November on news momentum for both the 2022 midterms and Trump’s 2024 announcement, its performance has been volatile. Now the stock is falling again as DWAC investors come to terms with the fact the end is approaching.
Additionally, Musk’s timing isn’t great for the company. Tomorrow marks the next voting date for its merger with Trump Media & Technology Group (TMTG), Truth Social’s parent company. Digital World has attempted to delay the merger several times as bad news has piled up for the platform and Trump. This trend has only lowered investor confidence in DWAC stock, pushing shares down more and more.
This is exactly in line with predictions that Musk buying Twitter would spell the end for Truth Social and DWAC stock. Last month, I forecasted fellow Trump-trade Rumble (NASDAQ:RUM) would survive the deal while DWAC would plunge. So far, that scenario is playing out perfectly. DWAC stock is falling fast, and investors won’t wait around to see if it can rebound. It’s impossible to ignore the fact there is no path forward for the doomed special purpose acquisition company (SPAC).
Some may argue Trump staying away from Twitter means DWAC still has a chance to pull through. Anyone who takes this side isn’t considering Trump’s pattern of erratic behavior. The former president has a long history of saying one thing and doing another. But even before Musk’s announcement broke, both Digital World and Truth Social were struggling and showing no signs of improvement. As The Atlantic reports:
“Truth Social is flailing as both a megaphone — it has never attracted a large user base, especially outside Trump loyalists — and as a business proposition.”
Now Trump is faced with a choice. He can either return to Twitter and watch the company he built crash and burn, or stay on it and realize he can’t make it successful. Neither option is good and both point toward the same outcome: DWAC stock hitting rock bottom and hurting the investors.
On the date of publication, Samuel O’Brient 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.
Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.
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