Now less than a year away from elections, the race for who will be tapped as the next U.S. president appears to be trending toward another Biden-Trump showdown. That’s especially true after Ron DeSantis dropped out of the presidential race and endorsed former President Donald Trump this past weekend. For investors in Digital World Acquisition (NASDAQ:DWAC) and DWAC stock, that’s music to the ears.
Why? Well, Digital World is the special purpose acquisition company (SPAC) looking to bring Trump’s media and technology company — including its Truth Social social media platform — public. Despite a long waiting period (a merger was first announced back in 2021), investors expect that a Trump victory, or even a nomination, could lead to the merger finally taking place.
The hype train appears to be back in overdrive for this Trump-related stock. Let’s dive into the impressive move of more than 75% in DWAC stock today — and whether it’s sustainable moving forward.
DWAC Stock Surges on Trump Momentum
As has been the case with various Trump-related stocks in recent days, the increased momentum seen around the Trump campaign has coincided with the performance of many companies tied to the former president. For Digital World, perhaps this momentum makes the most sense, with many of the previous delays tied to regulatory headwinds that could conceivably be resolved if Trump continues to see political wins.
Of course, the race isn’t over yet for the Republican nomination to run against President Joe Biden. And it remains to be seen just how Trump may perform in a presidential race, if he does indeed make it that far.
However, at least for now, DWAC stock and other Trump-linked companies have strong momentum. We’ve seen previous hype-driven rallies take these stocks on incredible rides in the past. Today, it appears many speculators and investors are betting on a similar scenario playing out.
Personally, though, I think this Trump-linked SPAC remains far too risky for the average investor. While it may be a great vehicle for investors to speculate on Trump’s political momentum, it’s also unclear how viable this move is relative to the future fundamentals of the merged entity (if the SPAC merger actually takes place). For now, I’ll continue to watch the action happily from the sidelines.
On the date of publication, Chris MacDonald 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.
