Why Is Digital World (DWAC) Stock Down Today? | #socialmedia


Elon Musk’s social media ambitions are pushing Digital World Acquisition Corp. (NASDAQ:DWAC) down today. The blank check partner of the Trump Media & Technology Group has faced an increasingly difficult road since Truth Social’s launch. The steep decline of app download rates quickly spelled problems for the right-wing social media platform. But now, as Elon Musk maneuvers to acquire Twitter (NYSE:TWTR), the path forward for DWAC stock looks even more questionable.

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What’s Happening With DWAC Stock

This week isn’t off to a good start for DWAC stock. It began this morning by falling sharply and hasn’t rebounded. As of this writing, it is down almost 4% for the day. The stock rose briefly last week on rumors of Fox News joining Truth Social. Sources were quick to confirm that it was not true, however, sending DWAC back into the red.

Since its launch, the company has seen few positive catalysts. Now, Elon Musk may inadvertently usher in the end of Truth Social.

Why It Matters

Despite constant speculation, the future of Twitter remains unclear. As InvestorPlace Assistant News Writer Eddie Pan reports, the company’s board of directors has voted to enact a “limited duration shareholder rights plan.” More commonly referred to as a poison pill, it could stop Musk’s attempted hostile takeover. However, Musk maintains that such a move would go against the interests of Twitter’s shareholders.

If Musk is unable to acquire and privatize Twitter, he may be tempted to explore a different option. Reuters reports that he is giving “serious thought” to launching his own platform.

The way it looks from here, Musk has two options. And either one will likely mean the end of Truth Social. If he is able to purchase Twitter, he’s made it clear he will privatize free speech. That will likely mean the reinstatement of accounts banned for violating the platform’s terms of service. The most notable of these accounts is, of course, that of former President Donald Trump. Anyone who left Twitter in protest of Trump’s ban following the Jan. 6 insurrection would likely return in that case.

And if Musk launches his own platform, conservative thinkers and politicians will likely flock to it. That could include Trump. The former president hasn’t been using the platform he launched, likely due to its lack of popularity. He’ll go where he can reach the largest audience. Where he goes, his throngs of followers will be close behind.

The primary reason for Truth Social’s failing is simple — Trump hasn’t been using it. If Musk launches his own platform, he won’t make that mistake. The entrepreneur ushered in a new wave of auto transportation when he built Tesla (NASDAQ:TSLA). He’s fully capable of building a social network that could compete with Twitter, appealing to the many users who have complained about Big Tech’s censorship policies.

What It Means for DWAC Stock

The bottom line is that DWAC stock is heading for a fall. Elon Musk can build what Donald Trump couldn’t. And he won’t back down. Whichever road he takes will lead to a new frontier within the social media world. And it will lead Truth Social straight to the bottom.

Investors should be closely watching social media stocks. History is unfolding, and Musk is poised to change the game permanently. However, DWAC stock is the worst social media play. The only thing that could potentially save it would be if Musk were to acquire the company, but his sights are set elsewhere. Investors should focus on companies on the way up, not the way down.

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.



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