Connect with us

Stocks

Why You’d Be Crazy to Short Digital World Acquisition Stock

When I saw InvestorPlace’s Chris Tyler’s take on Digital World Acquisition (NASDAQ:DWAC), the special purpose acquisition company poised to take Trump Media & Technology Group (TMTG) public, I found myself conflicted. In any o…

When I saw InvestorPlace’s Chris Tyler’s take on Digital World Acquisition (NASDAQ:DWAC), the special purpose acquisition company poised to take Trump Media & Technology Group (TMTG) public, I found myself conflicted. In any other circumstance, I would agree wholeheartedly with his position on DWAC stock.

Source: rafapress / Shutterstock

Advertisement

And that position is simply this: DWAC stock is a “train wreck of an idea.” Tyler acknowledged the rave support that the SPAC — particularly the underlying Truth Social platform — has received (it might be dangerous not to). But he observed some technical signals that suggested a bearish posture.

I don’t want to give away his entire analysis, so I encourage you to check it out before placing a big wager on DWAC stock. As with anything, it’s important to gather a full spectrum of opinions as part of your due diligence prior to making a final decision.

Advertisement

As I said above, if we were talking about ordinary circumstances, I would probably wholeheartedly agree with my InvestorPlace colleague. Can you imagine if any other GOP candidate — let’s say Sen. Ted Cruz — wanted to take a social media platform public via a SPAC? After my tears of laughter dried, I would investigate ways of shorting it.

Advertisement
  • 7 Hot Stocks That Show No Signs of Cooling Off

But DWAC stock? I think I have a better chance of seeing pigs fly than I do of succeeding with a sustained short position against Digital World Acquisition.

You have to understand that former President Donald Trump changed modern politics forever. Just like a certain Nazarene carpenter changed a little thing called the calendar, we have to start talking about America in terms of pre-Trump and post-Trump.

Some Buying DWAC Stock As a Badge of Honor

In recent articles about DWAC stock, I’ve stressed how much the pro-Trump community loves the man. In my last go-around, I stated that the SPAC essentially gave hardcore conservatives the ability to support right-wing ideologies without incurring reputational damage. Honestly, who’s going to know unless you broadcast your holdings publicly? Well, I may have been more right than I thought.

Advertisement

According to a recent Bloomberg article, Trump supporters are making DWAC stock the “best-performing SPAC of its kind.” As is stated in the piece, owning shares can be a “badge of honor” among the former president’s supporters.

Advertisement

Exactly.

To return to my colleague, I would also be concerned if a particular investment I was following pinged the bearish signal Tyler referenced regarding Digital World Acquisition. But I would gently counter with this: Very few stocks outside of meme stocks carry the strong sense of symbolism that DWAC does.

Advertisement

Indeed, for meme stocks, outside of the community’s support for publicly traded private prisons, it was understandable why meme traders did what they did. In short, they wanted revenge against Wall Street hedge funds that nuked the global economy back in 2008. Good for them. Good for all of us.

But there’s a certain segment of the conservative population — not all, I repeat, not all — that treat Trump and the broader Trump movement as a chance to reassert America’s western culture and heritage as the dominant ethos.

Advertisement

Money is a powerful motivator. But blood? If indoctrinated enough, people will defend their sense of identity and homeland to the bitter end, if need be. That’s a special kind of catalyst that you can’t assess through traditional analytical methodologies.

That’s why I’m going to take a bullish position on DWAC stock.

Advertisement

The Bottom Line on DWAC Stock

In conclusion, I want to take an opportunity to clarify the record. My bullish view on DWAC stock does not mean that I support nor reject the various positions that Trump has disseminated. Like any leader of note, I find some of his views to be reasonable and others problematic.

Advertisement

Admittedly, since the coronavirus pandemic, I find him to be stretching my patience more so than the other way around. But irrespective of my views about Trump’s various talking points — whether good, bad or indifferent — I want to speak honestly about my observations.

Like it or not, DWAC stock commands a level of support that’s unprecedented in both politics and investing. Therefore, until Trump does something to implode this narrative, I’m going to believe in the power of his SPAC.

Advertisement

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

Advertisement

More From InvestorPlace

  • Stock Prodigy Who Found NIO at $2… Says Buy THIS Now
  • Man Who Called Black Monday: “Prepare Now.”
  • Get in Now on Tiny $3 ‘Forever Battery’ Stock

The post Why You’d Be Crazy to Short Digital World Acquisition Stock appeared first on InvestorPlace.

InvestorPlace | Stock Market News, Stock Advice & Trading Tips

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *