Today, the nearing closure of Elon Musk’s Twitter (NYSE:TWTR) acquisition is sending a shockwave through the markets. It’s also pushing down Digital World Acquisition (NASDAQ:DWAC) as a result. The blank-check partner of Trump Media & Technology Group (TMTG) has plunged all day on news of the deal. Of course, DWAC stock has seen many negative catalysts lately. If Musk successfully buys Twitter, however, it may spell the end of Truth Social altogether.
DWAC stock has spent plenty of time in the red since Truth Social launched in February 2022. However, today’s performance is particularly disconcerting. Today, shares closed down 13%. With no turnaround in sight, this can only be described as a race to the bottom. The question is, just how far will DWAC drop?
The way it looks right now, this stock still has more room to fall. Here’s what investors should know moving forward.
What’s Happening with DWAC Stock?
Over the past month, DWAC stock has fallen 50%, including today’s performance. For a stock that entered 2022 with so much potential, the move is disheartening to say the least, although not necessarily surprising. Downloads for the app have declined by more than 95% since launch. Two of the company’s top executives have already jumped ship as well.
However, those negative catalysts don’t even come close to the damage Truth Social will see if Elon Musk buys Twitter. That’s because the Tesla (NASDAQ:TSLA) CEO will be prioritizing “free speech” with the social media platform. Although Musk hasn’t specifically said so, this could mean reinstating former President Donald Trump’s account. If Trump returns to Twitter, everyone who left it in protest of his ban will come running back.
Right now, investors are well aware that Truth Social is on its last legs. If Elon Musk’s bid is successful, the platform will cease to have any real utility.
What It Means
Last week, DWAC stock fell when talk of the Twitter acquisition first began heating up. Now that the deal looks ready to close, shares are falling even faster. In fact, the constant bearish energy surrounding the stock is scaring away even the most contrarian investors.
Anyone unconvinced that Truth Social is being pushed off the edge should also look at the recent Kerrisdale Capital short report. The hedge fund made a convincing case as to why DWAC stock is a short play, emphasizing that it was unlikely to close its TMTG merger in the first place. Now, Musk is about to deliver the final nail in the coffin for DWAC.
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.