How Digital World Acquisition Corp. Stock Moves with President Biden’s Approval Rating

No matter how you parse Digital World Acquisition Corp (NASDAQ:DWAC), on paper, the special purpose acquisition company (SPAC) doesn’t make a whole lot of sense. Sure, DWAC stock captures plenty of attention due to its underlying platform; that is, Trump Media & Technology Group, which in turn supports its flagship product Truth Social.

Truth Social app logo seen on the smartphone and blurred TMTG logo on the laptop.

Source: mundissima / Shutterstock

Given that many — not all — folks on the right side of the political spectrum care deeply about censorship concerns, DWAC stock might appear to leverage some relevance. But it’s also debatable just how much censorship-free advocates actually care about freedom of speech and instead only care about disseminating certain controversial topics.

Look at it this way. Social media platforms like Twitter (NYSE:TWTR) have zero issues with people using foul language, broadcasting violence (within reasonable boundaries) and even explicit material — with proper warnings attached. So the controversy surrounding DWAC stock doesn’t seem to be about a censorship-free platform.

Logically, one of the bullish factors that buttress DWAC stock is that Truth Social enables content creators to distribute alternative editorials about tough issues — inter-community relations, health and wellness subsegments, human migration patterns — without administrative repercussions like de-platforming.

According to the Pew Research Center, the partisan divide in media trust widened between 2016 and 2021, driven largely by massive distrust among Republican voters. Therefore, a platform that caters to conservative talking points will draw some attention from the crowd.

But really, how does that affect DWAC stock over the long run? Believe it or not, you can broadcast incredibly partisan views (both to the right and left) on platforms like Twitter. You just can’t say certain things, which most reasonable people will agree that reasonable limits must be placed on particularly volatile content.

Could Biden Be the Key to DWAC Stock?

Last month, Bloomberg ran an intriguing article about DWAC stock, suggesting that the security’s ownership has become a “badge of honor” among those supporting former President Donald Trump. And that seems to be, as simplistic as it sounds, the catalyst for the SPAC.

I mean, let’s face it: SPACs have struggled. So, why is this one doing well? Yeah, censorship-free media is nice and all, but I don’t think it can explain how resilient DWAC stock has been compared to its blank-check peers. It seems that without Trump, this investment would be in the toilet as are so many other shell companies.

Moreover, by loose deduction, the above thesis also suggests that the only thing that could get in the way of DWAC stock is President Joe Biden’s approval rating. In other words, the more popular Biden becomes, interest in DWAC might wane.

DWAC stock vs. President Biden approval rating

Source: Chart by Josh Enomoto

For those that are curious, I conducted a quick correlation analysis between Biden’s approval rating and the monthly average price of DWAC stock. Bear in mind that without much data to work from, no one should use this observation as the central focus of their due diligence.

Nevertheless, Biden’s approval and DWAC stock do share an inverse correlation of 33%. Now, this is a very weak coefficient, something that most researchers would not use to base the entirety of their analyses. However, it’s not completely dismissible in my opinion. And it’s very interesting that the coefficient between Biden’s approval and DWAC’s price is negative — or inversely correlated.

So, I don’t think the Bloomberg article is what critics might term “fake news.” Trump appears to have a quantifiable influence on DWAC stock, if only as a countering force to how much people dislike President Biden’s leadership.

A Solid Speculation

If indeed the driving force of the Trump SPAC is the man himself, then those who bet on it might be in good hands. I just don’t see President Biden gaining much positive sentiment for the rest of his term(s).

Let’s be fair — Biden entered office into one of the most calamitous situations a leader can face. However, he seems behind the ball on multiple issues, as if he were the victim of his circumstances. I mean, he is, but the public wants to see greatness — or at least the perception of it — from their leaders.

Now, whether you agree Trump is a great leader or not, he certainly perceives himself to be. More importantly, so do his many followers. So, unless this narrative flips on its head, I think people can trust DWAC stock as a relatively stable speculative venture.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/for-dwac-stock-to-fall-biden-approval-must-rise/.

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