Truth Social is coming off a difficult week last week, and this one isn’t off to a better start. Its blank-check partner, Digital World Acquisition Corp. (NASDAQ:DWAC), is down again today after this morning brought more bad news. Two of the platform’s top executives have resigned from their positions. The news has sent DWAC stock into a downward spiral as investors question the stability of the Trump Media & Technology Group (TMTG).
What’s Happening With DWAC Stock
It has been less than a year since Josh Adams and Billy Boozer joined the developing social media platform as Chief Technology Officer and Chief Product Officer. Reuters reports that they have both resigned at a “critical juncture for the company’s smartphone-app release plans.”
Despite a slight rally this morning, DWAC stock is back to falling. As of this writing, it is down almost 11% for the day and shows no signs of regaining any momentum. These declines come after the stock fell last week amid reports of app traffic plunging.
Why It Matters
Since the platform launched, Truth Social has been dealing with a chain of bad news. The mobile app quickly encountered many glitches after its launch, prompting investors to regard the company with some skepticism. Then came last week’s reports that downloads for the app had declined by 93% since the app launched. The last thing the company needed was for two of its leaders to walk away. But that’s exactly what we’ve seen, and there’s little reason to suspect that DWAC stock will turn around.
As InvestorPlace contributor Ian Bezek notes, there are typically bugs when launching any type of software. However, these technical malfunctions were only the beginning of Truth Social’s problems. The real problem pushing it down is the fact that former president Donald Trump hasn’t been using it. He’s posted once and doesn’t seem to have any interest in returning. For the users who remember how much he used to tweet, this must feel like a significant letdown. It’s easy to see why downloads have fallen.
Even easier to see, though, is why the people behind the platform are jumping ship. After all the hype that made DWAC stock an overnight market sensation, the platform’s lack of functionality and utility have become impossible to ignore. BBC reports that the app has been “branded a disaster.” No one wants to be associated with a losing company.
A month after its launch, the company still does not offer an Android platform, thereby excluding 40% of smartphone users. And according to sources interview by Reuters, Adams and Boozer were two of the primary reasons the company was functioning at all. With them gone, Truth Social will struggle even more. Replacing them won’t be easy, as tech sector employees as a group tend to lean liberal.
What It Means for DWAC Stock
Since the platform launched, nothing we have seen indicates that the app has any real staying power. Investor confidence is declining as quickly as Truth Social app downloads. It was easy to suspect that the company was being mismanaged, but now the resignation of two top executives proves that such an assumption was correct. Everyone should remember that the company’s initial success was driven purely by speculation and superficial momentum.
The market experts who have been bullish on DWAC stock because of Trump’s influence may want to rethink their methodology. Truth Social could have been a powerful weapon for the former president, but he has chosen not to use it. As a result, the company is unraveling at the seams. Investors shouldn’t expect DWAC stock to pick back up anytime soon.
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.