This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
What should investors do when the underlying thesis for their investment starts crumbling? Head for the exit, of course. This is exactly what appears to be in store for Digital World (NASDAQ: DWAC) investors if the latest reporting from NBC pans out.
To wit, NBC is now reporting that the Trump Presidential campaign is planning to petition Facebook's parent company, Meta, to unban the account of the former US President. Reportedly, the campaign has asked Meta for a "meeting to discuss President Trump's prompt reinstatement to the platform." Bear in mind that Twitter, under Elon Musk, has already removed the controversial ban on Trump's account. If the former US President is now eager to return to Facebook, it is only reasonable to conclude that Trump will also reactivate his Twitter account, landing a death knell to his own social media initiative, dubbed Truth Social.
Of course, from a purely political viewpoint, such a move makes sense. After all, Truth Social has just around 2 million daily active users. For comparison, over 200 million people use Twitter daily. With around 500 advertisers recently boycotting Twitter, the global town square is not exactly in a healthy sphere itself.
Bear in mind that Truth Social is a project of the Trump Media and Technology Group (TMTG). The SPAC Digital World is slated to take TMTG public via a reverse merger.
With Truth Social's entire raison d'être about to go up in flames, it is hardly a surprise that Digital World shares are tanking, with the stock currently down 3 percent.
Even before today's news, Digital World was largely flailing, besieged by a host of investigations. For instance, the SEC and FINRA are investigating allegations that the SPAC's management violated securities law by holding private discussions about a merger with TMTG as early as May 2021 but failed to disclose this pertinent information in its public filings. The SEC is also looking into reports that Rocket One Capital might have been privy to the impending merger between TMTG and Digital World before the public announcement.
