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RUM Stock vs. DWAC Stock: Which Will Survive If Musk Buys Twitter?


  • Elon Musk has renewed his quest to acquire Twitter (TWTR).
  • This could mean trouble for alternative social media platforms.
  • Digital World Acquisition Corp (DWAC) should be nervous.
DWAC stock - RUM Stock vs. DWAC Stock: Which Will Survive If Musk Buys Twitter?

Source: Tada Images / Shutterstock.com

When Elon Musk first offered to acquire Twitter (NYSE:TWTR), he proposed making the platform more free-speech-centric. This delighted some users, as #ElonMuskBuyTwitter quickly began to trend. But for some of the platform’s competitors, the future looked questionable. In the past year, both Digital World Acquisition Corp (NASDAQ:DWAC) and Rumble (NASDAQ:RUM) have carved out a market niche providing more conservative consumers with a platform. While Musk ultimately attempted to back out of the deal, this week he announced plans to honor his initial offer. Now that his vision for Twitter seems likely to be carried out, investors should be carefully evaluating DWAC stock and Rumble.

It will be difficult for both Trump trades to survive if Musk takes over Twitter. But let’s take a closer look at which company is better positioned to succeed.

RUM Stock vs. DWAC Stock

Early in 2022, these two stocks often moved in solidarity. As Truth Social’s blank-check partner, DWAC rose to market prominence on the hype surrounding the platform’s launch. Unfortunately, since it debuted in February 2022, DWAC stock has been fighting an uphill battle. Technical difficulties plagued the platform post-launch, causing downloads to plunge by more than 90%. Even after Donald Trump began using it regularly, the company has faced a continuous train of lawsuits and regulatory probes. More recently, DWAC maneuvered to delay the merger vote, strongly indicating that it is having doubts about its partner’s future.

While Truth Social has been working hard to stay relevant, Rumble has been growing and thriving. In August 2022, it reported record user growth as DWAC stock tumbled. One month later, it successfully cleared the final hurdle after merging with its special purpose acquisition company (SPAC) partner. RUM stock made its trading debut in a turbulent economy but investors shouldn’t let that distract them from the underlying truth. Rumble has demonstrated the ability to grow while Truth Social has not. Additionally, the Canada-based video-sharing platform operates in a slightly different niche than Twitter whereas Truth Social is modeled after the larger platform.

This key difference is how Rumble can compete with Twitter under Musk. The video-sharing platform is focused on growth. And following its initial public offering (IPO), it has the cash to invest in exactly that. As InvestorPlace contributor David Moadel reports:

Rumble will have to pay transaction expenses, but what will the platform do with the net proceeds? Importantly, the funds “will be used to attract new content creators to the Rumble and Locals platforms.” This is exactly what the investors should want to hear. Content consumers want to see familiar faces.

The Bottom Line

Moadel also floats the idea of the platform courting popular podcaster Joe Rogan. While Rumble’s first attempts to lure Rogan away from Spotify (NYSE:SPOT) did not succeed, it did not end up holding the company back. As Moadel notes, Rumble will keep attracting new content creators, which will help grow its user base accordingly. These types of media personalities will choose Twitter over Truth Social due to its dynamic reach. But they will also keep using Rumble.

While RUM stock has struggled so far, it has significant potential to grow within the coming months. As the 2024 presidential election draws near, conservative speakers will have more to talk about. Musk buying Twitter may be the end of DWAC stock but it could help RUM stock soar.

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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/rum-stock-vs-dwac-stock-which-will-survive-if-musk-buys-twitter/.

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