If you’re a stock trader, chances are pretty good that you’ve heard about the in-progress special purpose acquisition company (SPAC) merger of Digital World Acquisition (NASDAQ:DWAC) and Trump Media & Technology Group (TMTG). As you might expect, DWAC stock is somewhat polarizing and its price action is volatile.
Reportedly, TMTG will launch Truth Social, a conservative social-media platform that says it will emphasize First Amendment rights.
Soon after the SPAC merger announcement, DWAC stock reportedly surged 357% in a single day. It was so wild that trading was halted on the stock multiple times due to its volatility.
Along with that, Digital World Acquisition caught the attention of users on a popular digital investment forum. Ironically enough, this social media SPAC stock could be influenced, in a big way, by social media.
A Closer Look at DWAC Stock
As alluded to earlier, DWAC stock is a pre-merger SPAC stock.
So, it shouldn’t be too surprising that the stock traded near $10 prior to the Oct. 20 merger announcement. After all, $10 is a typical price for a SPAC stock.
And, you already have an idea of what happened to DWAC stock on Oct. 21. The share price skyrocketed, and continued moving higher the following day.
At one point, the stock peaked at a jaw-dropping $175. However, that rally couldn’t last forever.
Thus, DWAC stock eased back into the mid-$60’s in late October, and then settled into the $50’s in early November.
It’s too early to attribute a defined range to the stock. Still, at least there appears to be some equilibrium between the buyers and sellers now – i.e., the volatility has subsided.
Providing a Voice
I really like InvestorPlace contributor Larry Ramer’s analysis of DWAC stock. It’s definitely worth reading, if you haven’t done so already.
In essence, Ramer acknowledges the political aspects of Digital World Acquisition and Truth Social, without requiring the readers to adopt any particular political stance.
That’s a great way to view any investment opportunity. I’ve always felt that traders can become more profitable when they set their politics aside and view the situation objectively.
Ramer reminds us that former President Donald Trump received more than 74 million votes in his 2020 reelection bid.
Thus, Trump’s social-media enterprise could be quite lucrative when it goes online.
Moreover, many people will undoubtedly view Truth Social as an outlet that can provide a voice for folks who don’t want to (or aren’t allowed to) use other social-media platforms.
TMTG’s investor deck drives this point home forcefully. It asks, “What Happened to Freedom of Speech?” and presents Truth Social as a “Market Opportunity to Disrupt Big Tech.”
A New Stock on the Menu
At the same time, investors shouldn’t ignore DWAC’s potential to become a target for a Reddit-fueled short squeeze in the near future.
Certainly, it’s possible that users on the popular Reddit forum r/WallStreetBets contributed to the stock’s astounding mid-October rally.
Yet, a much bigger share-price pump could be imminent.
At least, that’s what WallStreetBets founder Jamie Rogozinski seems to suggest.
In a recent interview, Rogozinski asserted that Trump’s SPAC is clearly “a new stock on the menu” for the WallStreetBets crowd.
Not only that, but Rogozinski even indicated that DWAC stock could be on deck for a Reddit-prompted run-up.
“I think it’s clear that this one is next and I think it’s going to be a while before they move on to the next one,” he predicted.
Don’t assume that Rogozinski is thinking about a short squeeze with this stock, though.
“This is not a short squeeze situation. I believe the move is based off of inherent demand for this thing. There’s a lot of excitement and I think the price speaks for itself,” he clarified.
The Bottom Line
Rogozinski is familiar with the inner workings of Reddit, so his words carry some weight.
Even if DWAC stock doesn’t get a Reddit bump, though, it can still move higher very soon.
As long as Truth Social offers an alternative channel of expression – and as long as we view Digital World Acquisition objectively – then there’s a prime opportunity to invest here.
On the date of publication, David Moadel 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.
