Digital World Acquisition Corp (NASDAQ:DWAC) is performing an amazing feat of defying gravity. Over the past month, all major indexes are down double digits. DWAC stock, on the other hand, is up 47% for the past month.
Look, if you want to buy stock in former President Donald Trump’s new business, I’ve got no issue. It is one of several thousand you can choose from that are listed in the U.S. Further, you might be a Trump supporter, and that’s all right, too. It’s a free world.
However, if you try to make a case for its outrageous valuation, that is where I draw the line. It is sheer stupidity to think that Truth Social will be the Second Coming of Christ. Not even Twitter can lay claim to that, and it has almost 400 million users.
I have got two theories about what is happening here. But, unfortunately, neither of them is good.
DWAC Stock Pump and Dump
Just as we saw during Trump’s presidency, the man will do what is best for him, regardless of what it means for the country. We saw him go against presidential norms and put his assets in a revocable trust rather than a blind trust, which in effect, created a conflict of interest, even if only by moral standards and not the law.
There is no doubt in my mind that Trump will toot his own horn on Truth Social, refusing to put his hat in the ring for 2024 until the very last minute, getting his base of supporters all revved up, and hopefully generating buckets of revenue from them in the process.
I have no idea if he intends to run or not.
What I know is that the man has little or no moral fiber and will throw anyone under the bus to further his goals. Before you get all hot and bothered — I’m speaking about those Trump supporters I mentioned earlier — these are not original thoughts of mine. Many people have expressed them in the past. I am just reiterating them.
It is my theory, and only mine, that Trump is knowingly stringing voters along so that he can make money from his latest charade of a business. If there is a way for him to make a killing, he will throw his Election 2024 financial supporters overboard.
To me, this sings like a pump and dump.
Patrick Orlando Is No Tony Orlando
In the past couple of months, news stories have surfaced suggesting that Trump and Digital World had discussions months before the special purpose acquisition company (SPAC) went public in September 2021. The U.S. Securities and Exchange Commission (SEC) will most certainly put the kibosh on the merger if that is true.
Axios contributor Dan Primack discussed in mid-December the lawsuit filed by private equity investor Brian Shevland that claims he was pushed out of DWAC without warning or cause. Primack includes the 25-page complaint. You might want to have a read. It says a lot about Digital World Chief Executive Officer (CEO) Patrick Orlando and his lack of credibility.
In December, I questioned the veracity of Orlando’s experience as a dealmaker and entrepreneur, saying:
“His biggest accomplishments appear to be his MIT engineering degree, a stint at Deutsche Bank as a derivatives trader, and the founder of Benessere Capital, an investment banking advisory firm. It all looks good on paper, but it doesn’t mean squat when it comes to assessing the strengths and weaknesses of a potential merger candidate. The closest Orlando gets to dirtying his hands is a stint as CFO for a wholesale sugar merchant.”
It gets worse.
Here’s a direct quote from Shevland’s complaint:
“Prior to his introduction to Shevland, Orlando was a little-known financial advisor who was in danger of having his securities licenses lapse because he hadn’t been registered with a broker/dealer for approaching two years. Orlando also lacked capital, a team, an established investment business and even his own office. Orlando also had minimal prior experience with SPACs. Indeed, his first attempted SPAC, Yunhong International, did not complete a merger and is now in liquidation.”
The Bottom Line on DWAC Stock
I think it is hilarious that the markets are tanking and the only thing going up right now is a poorly-run shell game by a two-bit wannabe hedge fund investor.
I dare you to read this Washington Post article about Arc Capital. If it doesn’t make you think twice about owning shares in this pathetic excuse of an investment, nothing will.
And before you say, “it’s fake news,” you can find most of the information in SEC filings, some of which the authors link to.
As I say in the headline, stupid is as stupid does.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.