Why Donald Trump’s Indictment Still Doesn’t Make DWAC Stock a Buy


  • Former President Donald Trump’s indictment helped Digital World Acquisition (DWAC) stock rise today.
  • This doesn’t mean its growth trends will continue, however.
  • The former president’s legal woes will likely sink DWAC stock in the long run.
Truth Social (DWAC) app logo seen on the smartphone and blurred TMTG logo on the laptop.
Source: mundissima / Shutterstock

Yesterday, a Manhattan grand jury made history when it voted to indict former President Donald Trump. The ex-commander-in-chief is accused of offering hush money to adult film star Stormy Daniels during the 2016 presidential election. As a result of the indictment news, however, Digital World Acquisition (NASDAQ:DWAC) stock rose today.

As of now, it’s unclear how Trump will surrender to the charges brought forth by Manhattan District Attorney Alvin Bragg. This leaves many questions. Per CNN, the former president reportedly faces “more than 30 counts related to business fraud in the indictment,” although they are all under seal.

While this hasn’t been a good week for Trump, his problems have been excellent for Trump stocks. DWAC stock climbed all day as his supporters turned to Truth Social for commentary and answers. Still, shares won’t likely stay in the green, even if Trump’s troubles persist.

What’s Happening With DWAC Stock?

The phenomenon of DWAC stock rising when Trump is in the news isn’t new by any means. That’s really the only thing that has pushed shares up since Truth Social’s downloads started declining rapidly a few months after launch. Today’s news boosted shares by more than 7%. However, DWAC did not see any real growth until yesterday.

This is absolutely not cause to regard DWAC stock as a buy. Investors need to be careful not to confuse good Trump news with bad. When Trump hyped up the possibility of him running for president again in 2024, shares rose. This time around, he’s making headlines for something that could potentially sink his campaign.

Although some experts speculating that the indictment could help him in 2024, there’s also the possibility that the result of the charges will prevent Trump from running in the first place. It’s unclear where these legal problems will lead, but we do know that Wall Street hates uncertainty.

Trump’s uncertain future is far from the only problem facing DWAC stock, too. The fact is, the company is fundamentally unstable. Its limited history is full of U.S. Securities and Exchange Commission (SEC) subpoenas, regulatory probes and leadership turnover. Most recently, the blank-check partner of Trump Media & Technology Group fired CEO Patrick Orlando. Despite a slight bump, this news did little to actually move DWAC stock, mostly because it did not address the company’s real problems. And even that pales in comparison to the fact that shares started the month by hitting a 52-week low.

What’s Next for Trump?

DWAC stock may see some slight gains in the near future as interest in Trump’s fate remains high. But any gains won’t be sustainable as risk averse investors avoid shares. It’s unclear if Trump will go to prison, but if he does, his access to social media will surely be limited. As such, DWAC stock will likely perform as it did before he started using Truth Social — consistently trending downward.

This isn’t to say that Trump will likely face prison time. His fate is still unwritten. However, it is likely that more legal problems will surface. NPR reports that Trump is facing scrutiny from other investigations, which could lead to more charges in the near future. All of this will likely make things harder for Trump 2024 — and ultimately make it harder for Digital World Acquisition to rise.

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.

Article printed from InvestorPlace Media, https://investorplace.com/2023/03/why-donald-trumps-indictment-still-doesnt-make-dwac-stock-a-buy/.

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