October 2022 has been a bad month for the Trump trades and it just got worse. Rumble (NASDAQ:RUM) stock has been struggling since its late September trading debut. Things have been worse for Digital World Acquisition Corp (NASDAQ:DWAC) which has failed to delay its merger vote, sending shares down more with every headline.
Elon Musk’s plan of moving forward with his Twitter (NYSE:TWTR) takeover bid didn’t help the already bleak economic landscape. But now the two companies may have to contend with another rival platform owned by a popular celebrity. Right-wing social network Parler has announced that Ye, formerly known as Kanye West, plans on buying it. Both DWAC stock and RUM stock have been plunging all day on the news.
Let’s take a closer look at what this new deal will mean for Parler, Rumble and investors.
RUM Stock in a West/Musk Market
Since news of the acquisition broke today, RUM stock has been trending downward. As of this writing, it is down over 6% for the day and shows no signs of rebounding. Things aren’t going much better for DWAC. The partner of the Trump Media & Technology Group (TMTG), the parent company of Truth Social, is down almost 7% and looks primed to continue sinking.
West, who last year legally changed his name to Ye, rose to fame as a rapper. Since then, he’s branched out into the business world and had some success in fashion. In January 2022, he announced a partnership with the European label Balenciaga. Through his years in the spotlight, West has earned a reputation as a firebrand personality who does not shy away from controversy. As InvestorPlace contributor Larry Ramer reports, he recently found himself banned from Twitter and Instagram after making a string of antisemitic posts. This action against him likely influenced Ye’s decision to acquire his own platform. According to a statement released by Parler, he noted:
In a world where conservative opinions are considered to be controversial, we have to make sure we have the right to freely express ourselves.
Parler, which bills itself as an “unmoderated free speech” platform, rose to prominence during Donald Trump’s presidency. Following the January 6 insurrection, both Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) removed it from their app stores, citing the role it played in the attack on the Capitol. Since the rise of Truth Social, Parler hasn’t received much media coverage as the focus has been on Trump’s personal venture. But someone as popular as Ye taking over could be exactly what it needs to start rising again, particularly as Truth Social is struggling to stay afloat.
On a day like this, it’s easy to wonder if Ye’s deal will sink both the Trump trades. He could absolutely turn Parler into the powerful “free speech network” that Truth Social has failed to become. But regardless of how Ye handles his new company, Rumble will likely be okay. Just as RUM stock didn’t sink when Musk announced plans to acquire Twitter again, Ye’s buying Parler won’t keep it down. Rumble’s unique niche of operating in the video-sharing space allows it to compete with free-speech-centric microblogging platforms and even benefit from their growth.
RUM stock is down today primarily on negative market momentum but unlike DWAC stock, it will bounce back.
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.
