Digital World Acquisition (NASDAQ:DWAC) is falling today after Fox News confirmed it had not joined the Truth Social platform. Earlier this week, DWAC stock rose amid rumors that the network was on the Trump Media & Technology Group (TMTG) social media app. Now, though, shares are dropping on the news being false. This announcement raises some important questions for investors regarding both the app and its partner company.
Ever since a Fox News spokesperson stated its Truth Social account was fake, DWAC stock has been down. While shares briefly rallied this morning, they were just as quick to reverse direction. Currently, DWAC is down about 1% and shows no signs of a rebound.
Even with the growth this stock saw earlier in the week, today’s declines have pulled it back into the red. Here’s what investors should know moving forward.
What’s Happening with DWAC Stock?
It’s not hard to see why investors first believed Fox News had joined Truth Social. For one, the account created in the network’s name was verified by the platform and boasted more than 22,000 followers. CEO Devin Nunes even posted about the account, welcoming Fox and noting the platform was also home to conservative outlets like One America Network (OAN) and Newsmax.
As Axios reports, though, a spokesperson confirmed the outlet is actually “not on Truth Social.” Axios also points out that, while Truth Social features accounts from names like Fox Sports and NASCAR, those pages are not verified either. The accounts feature a bot disclaimer which tells users they’re an “RSS feed aggregating bot” and “not managed by or affiliated with the referenced news outlet.”
This is far from the only problem plaguing Truth Social, however. Since the platform first launched, downloads for the app have fallen by more than 90%. Two of the company’s top executives also resigned simultaneously. Until this week, almost all news surrounding the platform was negative; DWAC stock plunged and continued falling amid the onslaught of reported problems. And maybe worst of all? Even former President Donald Trump isn’t really using the platform. As a result, users have abandoned the app as quickly as they downloaded it.
Through it all, Truth Social has provided little information to shareholders. That lack of information is certainly a red flag. On top of that, the recent fake Fox News account raises further questions about management. Did Nunes actually believe Fox had joined the platform? Whatever the case, DWAC stock is looking more and more like an unstable investment.
What It Means
Details on Truth Social’s latest confusing updates are still emerging. But, while they do, the fake Fox News account should remind investors that the platform is fundamentally mismanaged. Regardless of whether Nunes knew Fox had not actually joined the platform — of which he is CEO — the company allowed a false account to be verified. What does that say about its vetting standards? The short answer: nothing good.
Even if Fox News had joined Truth Social, it’s unlikely that would have boosted shares either. As Nunes noted, the platform also features accounts from OAN and Newsmax. Neither has helped the platform achieve sustainable growth. Plus, Fox fans are still able to read updates from the network on Twitter (NYSE:TWTR).
Right now, DWAC stock is still falling and there’s no reason to believe a turnaround is eminent.
On the date of publication, Samuel O’Brient did not hold (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.