The market turbulence with which the stocks closely linked to former President Donald Trump have become synonymous continues today. Such has been the case since Digital World Acquisition (NASDAQ:DWAC) became an overnight sensation. That occurred following the news that it would be serving as the blank-check partner for the Trump Media & Technology Group (TMTG), and unforeseen news reports have helped shift markets in an entirely new direction since then. Yesterday saw both DWAC and fellow “Trump trade” CF Acquisition Corp. VI (NASDAQ:CFVI) rise all day as speculation grew that the two would be forming a partnership. Today, a new report has DWAC stock falling almost as quickly.
What’s Happening With DWAC Stock
Before markets opened this morning, Salon reported that a government watchdog organization had found evidence that Truth Social, the social media network that will be the primary subsidiary of TMTG, may have strong ties to an international government with a noted history of human rights violations. Accountable.US, a left-leaning watchdog organization has submitted a letter to the U.S. House Committee on Oversight and Reform advocating for a government investigation into Trump’s attempts to gain favor from Brazil’s President Jair Bolsonaro in his social media venture’s international launch. This news has not been good for DWAC stock.
The stock began the day by falling, and despite a quick rebound, it was even quicker to fall again. As of this writing, DWAC is down by more than 13% and has been declining all afternoon. Following yesterday’s rise, DWAC stock is still in the green by more than 21% for the past week. However, for the month, it’s in the red by 0.82%. As can be expected, CFVI stock has also been falling all afternoon and is currently down by almost 9%.
Why It Matters
No one from the Trump team has commented on the report from Accountable.US, leaving plenty of room for speculation. It isn’t hard at all to believe that the report is accurate. Trump and Bolsonaro have a history of siding with each other and sharing the same extreme-right values that have often been called authoritarian. Recent reports have indicated that Brazil’s president is employing the same tactics in his upcoming election that the U.S. saw from Trump in 2020, such as attempting to discredit the press and cast doubt regarding the legitimacy of the electoral process.
DWAC is already in hot water as the U.S. Securities and Exchange Commission (SEC) continues its probe into the company’s involvement with Trump’s company prior to the merger announcements. Reports last year speculated that Trump’s defeat in 2020 would deprive Bolsoanro of a “clear political advantage.” With that in mind, it certainly makes sense that he would be incentivized to do what he could to help the former president get back into power. It’s also clear that Trump will need to do everything he can to help his social media platform gain international reach and that the first people to whom he would turn would be his closest allies abroad. Bolsonaro would be an especially tempting target, as he is facing the prospect of reelection in 2022.
What It Means
A partnership of this sort between Trump and Bolsonaro could prove mutually beneficial for both parties. That doesn’t mean that the path forward will be so straightforward for DWAC stock. Recent events have proven that the more details emerge from behind the scenes, the more complicated the road ahead looks for the company.
As has been the case since October, all we can do is watch these companies closely, paying special attention DWAC stock. The way it looks from here, as DWAC goes, so go the Trump trades. All companies are worth watching as 2022 nears and with it, the alleged debut of Truth Social.
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.