Right now, many people are pondering one question: Will former President Donald Trump be arrested? As of now, the answer remains unclear. But while Americans watch and wait, Digital World Acquisition (NASDAQ:DWAC) is enjoying some momentum. The blank-check partner of the Trump Media & Technology Group (TMTG) is benefitting from the anticipation as users flock to Truth Social for updates.
However, not everything is going smoothly for the special purpose acquisition company (SPAC). Digital Word recently fired Patrick Orlando, the company’s CEO. DWAC stock closed in the green today, but investors should be careful not to mistake this for an actual market turnaround.
While letting Orlando go isn’t necessarily bad for the stock, it certainly won’t save DWAC in the long run. Let’s dive into what this news really means and how investors should assess the situation.
What’s Happening With DWAC Stock?
Trump’s potential pending arrest may be the best thing to happen to DWAC stock in some time. Shares closed the day up by 1.5% despite significant volatility earlier on, taking them up to 8% gains so far this week. After trending steadily downward since early November 2022, DWAC stock is finally on an upward trajectory. However, this movement will likely end as soon as Trump’s fate becomes more clear.
Investors shouldn’t expect the firing of Patrick Orlando to accomplish anything, either. After all, Orlando isn’t going away completely. He will remain with the company as a director while previous director Eric Swider will serve as interim CEO.
It’s understandable why Digital World’s board would be looking for a change in leadership, given DWAC stock’s performance in recent months. However, no leader they bring in will likely be able to turn the company around. DWAC has been in a longstanding race to the bottom, plagued by many powerful headwinds.
To start, DWAC revolves around one company — and Truth Social hasn’t proven very successful. Interest in the social media platform has been sporadic and, at times, downloads have fallen more than 90%. It took Trump months to start using his own social network and even then, that wasn’t enough to make DWAC stock successful.
On top of that, Elon Musk purchasing Twitter hasn’t been good for the platform, giving users another avenue for conservative social media. Factor in the company’s troubled history with regulatory probes and U.S. Securities and Exchange Commission (SEC) subpoenas and it’s a wonder that DWAC stock hasn’t fallen even further.
The Bottom Line
This is all to say that Patrick Orlando isn’t what rendered DWAC stock unable to succeed in the market. As such, removing the CEO won’t address the issues the company still faces. As Axios reports:
“Orlando had been the merger’s most vocal cheerleader, regularly using Truth Social to encourage shareholders to vote in favor of merger extensions and online protests against the SEC.”
The most likely scenario is that the teams behind DWAC and TMTG will find someone similar to Orlando to step into the role he’s leaving. But even more likely is that the change won’t do much for DWAC stock. Shares will probably return to falling as soon as the momentum around Trump’s potential arrest cools.
Nothing has helped this company achieve sustainable growth so far. At this point, it seems like nothing will.
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.
