Digital World Acquisition (NASDAQ:DWAC) stock is rising today on speculation that former President Donald Trump will soon announce his 2024 presidential campaign.
According to Intelligencer, Trump said he has already made the decision to enter the race. This comes as he prepares to visit Washington D.C. for the first time since he left office. This news sent DWAC stock shooting up more than 5% after markets opened today. And while this news will certainly have Trump in focus, the momentum appears to have already cooled down. As of this writing, DWAC is trading up 2.8%.
It’s been a turbulent week for Truth Social’s merger partner. It received a bump earlier this week when Elon Musk announced he would terminate his Twitter (NYSE:TWTR) acquisition. But even with multiple positive catalysts, DWAC stock isn’t necessarily a good buy for long-term gains.
Let’s take a closer look at what why investors should approach shares cautiously.
What a Trump Run Would Mean for DWAC Stock
Trump’s latest announcement should surprise no one. Since he left the White House in early 2021, he has been floating the idea of running for office again. Even before his presidency ended, he made calls to allies and asked about the best path to launching a 2024 campaign.
At first glance, it’s easy to see this as the catalyst that DWAC stock needs. However, it is important for investors to assess the entire situation from a macroeconomic perspective. Let’s break it down.
Firstly, there’s no guarantee that Trump will receive the Republican National Committee (RNC) nomination. A recent poll from The New York Times and Siena College revealed that Trump is only the preferred candidate of 49% of Republican respondents. “The biggest question raised by the poll is whether it indicates that Trump might be vulnerable to a challenge in the Republican primary elections in 2024,” reports Voice of America. “Experts said that the results should be read with caution.”
Additionally, in the key state of Florida, another poll found that likely GOP challenger Ron DeSantis is the preferred candidate.
If Trump’s campaign doesn’t take off, DWAC stock will likely sink with it.
A Bad Time for Bad SPACs
Secondly, financial market factors still render DWAC stock an unstable investment. SPACs are struggling as the bullish energy that propelled them forward in 2021 has faded. InvestorPlace contributor Joel Baglole reports the following:
It’s not even clear if regulators will allow the reverse merger that would bring Trump Media and Technology Group public to proceed. The U.S. Securities and Exchange Commission (SEC) continues to investigate the proposed SPAC deal and whether it is in the best interest of investors.
As of now, the merger of the two companies looks questionable at best. The bearish case against DWAC stock made by short seller Kerrisdale Capital still largely holds true. The combination of the turbulent path to the merger and the trend of subpoenas make it hard to have any confidence in DWAC stock. Even a Trump 2024 campaign won’t make it a stable investment if the deal can’t close.
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.
