Many SPAC investors got burned last year after buying what are essentially shell companies that, for the most part, purchased low-quality assets with investor funds while paying executives handsomely. This resulted in SPAC’s losing their lustre and largely tanking in share price.
Apparently, Digital World Acquisition Corp (NASDAQ: DWAC) missed the memo about SPAC’s needing to invest in high-quality assets to curry investor favor. Instead, they bought Trump Media & Technology Group, which owns Truth Social, former president Donald Trump’s potentially soon-to-be-defunct social media site.
Truth Social, which Trump started after being banned from Twitter, has been nothing short of a disaster. In addition to almost no participation from Trump himself (he only posted once on the site weeks ago), the platform has experienced issues onboarding new users, including making users join waitlists that can last for weeks.
These issues have severely limited the user base on the platform. Trump himself has about 140,000 followers, drastically down from the 90 million followers he had on Twitter (NYSE: TWTR). According to those close to him, Trump is reportedly so upset with Truth Social’s performance that he has considered joining a rival site, such as GETTR.
Devin Nunes, the erstwhile Congressman who now heads up Truth Social, has attempted to address Trump’s frustrations by replacing senior leadership with people loyal to him, which led to the resignations of Truth Social’s chief technology officer, chief product development officer and chief legal affairs officer. The market was not happy with this mixup, with the stock down 25% since the announcement of the departures.
Where Truth Social and Digital World Acquisition Corp go from here remains unclear. With Trump seeming on the verge of giving up on the platform, it’s doubtful that this situation will get better soon. Expect Digital World Acquisition Corp. shares to continue their downward trend for the foreseeable future.
Shares of Digital World Acquisition Corp are currently trading at $47.28 per share, down –1.5% on the day. YTD DWAC stock is down -8.55%.
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Disclaimer: Wealthy VC holds does not hold a position in any of the stocks mentioned in this article.