Truth Social Is Heading Down a Dangerous Path


  • Digital World Acquisition (DWAC) stock has slumped in recent weeks.
  • This is likely tied to the company’s disappointing launch of its Truth Social app.
  • Until these problems are resolved, it’s hard to have any confidence in this company.

It’s hard launching a new piece of software. There are always going to be glitches, delays, and unforeseen issues that arise. It’s part of the process. So I’ve been reasonably patient in giving DWAC stock, Digital World Acquisition (NASDAQ:DWAC) and its Truth Social platform the benefit of the doubt.

A hand hovers over a phone screen with the Truth Social social media logo
Source: rafapress / Shutterstock

But after a month, even the most optimistic investor’s patience has to be wearing thin. Truth Social shows little sign of getting back on the right track. And now, DWAC stock is starting to pay a heavy toll for this lackadaisical launch strategy.

DWAC Digital World Acquisition Co. $64.51

Truth Social’s Buggy Launch

Digital World Acquisition is a special purpose acquisition company (SPAC) that is purchasing former president Trump’s media company. The primary asset of that company, at least at launch, is going to be its Truth Social app which backers have positioned as a rival to Twitter (NYSE:TWTR).

However, the first part of being a good social media application is staying online and working properly. Say what you will about Twitter’s features or site moderation, but the site usually works from a technical perspective. Truth Social, by contrast, has not.

The app officially launched on February 21. A few days of bugs and glitches would have been no surprise. However, it launched with a waitlist of hundreds of thousands of users as many curious people were never able to get onto Truth Social in the first place. It’s hard to build much sustainable buzz when many prospective users can’t even visit to begin with.

Few Signs of Improvement

It’s now more than a month since Truth Social’s official launch. And its inability to deliver on the basic user experience has led to a sharp decline in interest.

According to data from Sensor Tower, weekly app installs for Truth Social have slid from 800,000 at launch to just 60,000 weekly now, amounting to a more than 90% drop-off. Overall, Sensor Tower estimates that only 1.2 million people have signed up for Truth Social so far in total. And the number of active users on the website is likely far lower, given the issues people had with signing up, and the sparsity of actual content on the site.

To that last point, it’s rather surprising that Mr. Trump himself has not posted anything on the site in more than a month of operation. A big appeal to the site was supposed to be having people like Trump speak their minds without having to worry about censorship on sites such as Twitter. But if popular leaders don’t user Truth Social much, it’s hard to see why other people would either.

DWAC Stock Is Too Risky to Buy Now

While it’s complicated to figure out Digital World Acquisition’s total share count given the variety of dilutive pieces of a SPAC deal, it appears the post-deal company will have a share count north of 200 million shares. That would put Truth Social’s valuation well above $10 billion at current stock price levels.

This is an awfully difficult valuation to support given the current state of the app. It’s been a mess on the hardware side of the equation. Basic features such as support for the Android operating system still aren’t available. And on the content side, it is lacking posts from key figures such as Mr. Trump that were supposed to propel the platform forward.

The user numbers should give any potential investor pause. Is a company with just 1.2 million downloads and surely less than that in active users worth $10 billion or more? Twitter, by contrast, has a market cap of around $30 billion and counts more than 200 million daily active users. One of those valuations is in a different galaxy than the other.

It’s possible that Truth Social will get its app working perfectly and the users will start to arrive in large quantities. That could change the discussion around DWAC stock entirely. Until there are signs of a turnaround, however, the stock should be avoided.

On the date of publication, Ian Bezek 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 Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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