DWAC Had its Worst Week in Months
Was it good timing last week when I wrote about Digital World Acquisition Corp (NASDAQ:DWAC) being a bubble that was ready to pop? To most, it was fairly obvious that it was a ticking time bomb. DWAC just had its worst week in months, and the stock could continue to fall from here.
When I wrote about DWAC last week I received some negative comments from readers. It’s fine, I can take the criticism, after all, writing opinion pieces on stocks can make you look really right or really, really wrong. I stand by what I wrote last week about DWAC being a bubble, and I’ll continue to pound the table on why this stock is overinflated.
DWAC fell by 25.5% last week despite still having two positive sessions. That means in three trading days, the stock fell by about $25 per share. If you think that is normal activity for a pre-merger SPAC stock, you are mistaken. The markets have been volatile but they have also been crushing non-profitable and poorly run businesses. It remains to be seen over the long-term if both of those will apply to Truth Social, but let’s just say the app certainly is not off to the start its users wanted.
Investors Are Losing Patience with Truth Social
The app has been terrible, there’s no other way to put it. Sure, it boasts a waiting list of over 1 million users but how long would you wait to use an app that is essentially a knockoff of Twitter (NYSE:TWTR)? Even the users that are in the app are already growing tired of a bad interface and recycled content, often from unverified accounts which means they are likely the product of Truth Social bots.
On top of that, former President Trump has only used the platform once, while the former First Lady recently came out and announced that Parler would be her social media platform of choice. Imagine if you were creating and launching a social media app and your significant other wouldn’t even use it. Not only that, but none of Trump’s children have verified accounts on Truth Social either, despite Donald Trump Jr., constantly raving about the app on other forms of social media. If this is starting to sound suspicious, it is.
Questions have circulated as to if Trump will use Truth Social as his official source of news and information for his campaign for presidency in 2024. But right now, it remains to be seen if the app will even make it to 2024. Truth Social CEO Devin Nunes says that developers are working around the clock to fix the app’s bugs but it might be too little too late. After all, you only get one first impression with users and more importantly, shareholders.
DWAC Stock Outlook 2022
Is this bubble finally ready to burst? It’s hard to say for sure. Meme stocks do not follow any sort of logic in how they behave. A positive announcement next week could send the stock soaring back higher, even if nothing has fundamentally changed about the company itself. I get the appeal, especially for right wing investors who were hoping that Truth Social would be the conservative voice in a social media landscape dominated by the left. But if you think this stock is accurately priced considering the botched launch and bleak outlook, you might be in for a big surprise.
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