Digital World Acquisition (NASDAQ:DWAC) is a special purpose acquisition company (SPAC). Even in a brutal downturn for SPACs, DWAC stock has managed to succeed beyond everyone’s wildest expectations. That’s because Digital World announced a merger with former President Trump’s emerging media and internet company, Trump Media & Technology Group (TMTG), which is planning on launching Truth Social… eventually.
This was just the right deal at the right time. For one, President Biden’s approval ratings have fallen significantly over the past six months. This creates more of an opportunity and interest in opposition leaders, such as Trump.
For another, debates over censorship and deplatforming continue picking up steam. The latest controversy over Joe Rogan and his show on Spotify (NYSE:SPOT) highlight the fraught nature of hosting edgy content on mainstream big tech platforms. In this political environment, Truth Social should be a hit. There’s one big problem though; the company hasn’t launched a product yet.
Momentum Reverses for DWAC Stock
DWAC stock already had one incredible run in 2021, jumping from its $10 offering price up to a brief 52-week high of $175 per share. Shares cooled back off a bit to end 2021, with the stock finishing the year around $50. This year has been promising once again for Digital World, with the stock nearly hitting $100 on Monday. However, the surge abruptly ended Monday afternoon.
That’s because TMTG announced that it is pushing back the launch date for Truth Social to the end of March. Previously, a placeholder for the application on one of the major app stores suggested that Truth Social would be available on Feb. 21. In TMTG’s defense, in its legal filings, it had said it intended to launch in the first quarter. So the end of March would still hit that timeframe. However, it’s a bit of a letdown for people that thought the February date was going to happen.
Now, to be sure, a month is not a big deal in the grand scheme of things. In one sense, it might make sense to delay the app. Launch it in a more polished state rather than rushing some half-baked application out the door and risk garnering immediate negative reviews. Truth Social hasn’t broken any hard deadlines or made a serious error in terms of messaging. However, there’s the sense that they could miss their moment.
Other Networks Are Rumbling Forward
On the same day DWAC stock slumped, another conservative social network was surging. That firm was a SPAC, CF Acquisition Corp. VI (NASDAQ:CFVI), which intends to merge with Canadian video platform Rumble.
Rumble has become prominent for hosting videos from conservative commentators that get banned from the big tech platforms. Rumble was able to score a ton of free press on Monday. That’s because it wrote an open letter to Joe Rogan offering him $100 million to move his controversial podcast from Spotify to Rumble.
For a variety of reasons, it seems fairly unlikely that Rogan would accept this offer. Among them, Spotify hasn’t canceled his show, so it’d presumably be a breach of contract for Rogan to jump ship to Rumble at this juncture.
Regardless, it was a stroke of genius for Rumble’s management. If they get Rogan for $100 million, it’d likely be a high return on investment. And even assuming nothing comes of it, CFVI — Rumble’s current SPAC ticker — saw shares leap as much as 30% on the news.
This gets to the broader point. There’s a ton of demand, both from investors and the broader general public, for a right-leaning social network that will serve as a counterbalance to big tech. The platform that gets it right could be a major winner. And Truth Social, since it has Trump, figures to be a top-tier competitor.
DWAC Stock Verdict
This should be Truth Social’s moment. Everything is lining up to put conservative media platforms in the spotlight. This Rogan controversy in particular is the best sort of publicity that sites like Rumble and Truth Social could hope for.
If Truth Social can simply launch on a reasonable schedule, the pieces are here to make this a winner. Especially heading into what will undoubtedly be contentious midterm elections this November. The environment is right. But if there’s not a working product, that would ruin everything. And, as we’ve seen with some of Trump’s other business ventures, sometimes the hype and marketing runs ahead of the actual deliverable product.
Digital World seems like a stock that should perform given current political and social conditions. However, it’s understandable why traders may rapidly move to CFVI stock (and Rumble) instead. TMTG’s Truth Social needs to actually get up and running before a lot of people will believe in the project.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a sizable New York City-based hedge fund. You can reach him on Twitter at @irbezek.