It hasn’t been a good year for former President Donald Trump or Truth Social. Indeed, Trump’s social media platform has struggled considerably to retain users. Earlier this month, Trump also lost his spot on the Forbes 400, supporting the popular theory that he isn’t actually as wealthy as he likes to pretend. According to Forbes, the former president’s net worth has plunged by more than $600 million over the past year. The primary cause? The failure of Truth Social.
Trump is also facing problems with his real estate business. But there’s no denying that his foray into social media has been a colossal flop. Late in 2022, Mediaite reported that the platform had been steadily losing hundreds of thousands of users. Almost a year later, it’s clear that things haven’t improved. However, this week brought an unexpected development for Digital World Acquisition (NASDAQ:DWAC). President Joe Biden’s campaign has joined Truth Social, creating some slight momentum for DWAC stock.
Still, investors hoping for a turnaround shouldn’t get their hopes up. Let’s take a closer look.
A Biden Bump for DWAC Stock?
Most people likely weren’t expecting Biden’s campaign to join Truth Social, a platform often seen as a far-right echo chamber. The reports of declining users on Truth Social are abundant and, according to The New York Times, its ads are full of scams and fake merchandise, with no major brands willing to advertise on the site. Even without the problems stemming from Digital World’s failure to complete its necessary merger, it’s easy to see why DWAC stock is struggling so much.
What may be less easy to understand at first glance is why Biden’s campaign would join the platform. As it turns out, the team working to keep Trump from being reelected has opted to literally meet his voters where they are. In its first post, the BidenHQ account stated “Converts welcome!” Since then, it has flooded the platform with pro-Biden content and cheeky jabs at Trump and other far-right politicians. Biden campaign spokesperson Kevin Munoz told NYT that “There’s very little ‘truth’ happening on Truth Social, but at least now it’ll be a little fun.”
So far, the strategy seems to be paying off in terms of digital engagement. As of this writing, the BidenHQ account has more followers than the Trump campaign’s account. This may create some buzz for the social media platform. But even if these trends continue, DWAC stock isn’t likely to see any momentum.
Even after getting the green light to extend its merger with Trump’s company, the future of the blank-check firm is still shrouded in uncertainty. Earlier this week, the special purpose acquisition company (SPAC) even admitted that its 2021 financials are unreliable. How can anyone bet on a stock with that kind of strike against it?
What Comes Next?
I’ve been arguing for months that DWAC stock is on its way out, regardless of what happens to Trump. The Biden campaign joining Truth Social certainly doesn’t change this hypothesis. When it comes to DWAC, there won’t be any real Biden bump; the best investors can hope for is a slight Biden buzz. In fact, even if the rise of the BidenHQ account compels other liberal politicians to join the platform, it won’t change the long list of problems facing Digital World.
All told, investors are better served to focus on nonpartisan media stocks for the upcoming election season, rather than Trump trades dependent on one politician who is facing multiple legal battles.
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.
