Donald Trump is one of the most well-known businessman in the world, yet his businesses have always been privately held. Through Digital World Acquisition, investors now have the opportunity to join forces with the former US president (DWAC). The debut of the Truth Social app has lifted the stock.
The Trump Media & Technology Group is being taken public through a special purpose acquisition company (SPAC). When the merger is complete, it is expected to trade on the Nasdaq under the symbol “TMTG.” The expected completion date has not been officially stated, however it is believed to be later in 2022 provided regulatory approval is obtained.
As he tries to take on technology behemoths like Twitter (TWTR) and Facebook parent Meta Platforms, Trump has touted that he will give a “Big Tent” platform (FB). However, it must overcome some regulatory obstacles.
So, is the ultimate Donald Trump stock a good investment right now?
Donald Trump On DWAC
The Trump Media & Technology Group will be taken public through a merger, with the Digital World Acquisition serving as the vehicle.
Trump presented his concept for the company last October, after struggling to contact his audience via social media since the Jan. 6 Capitol brawl.
“Unlike Big Tech platforms, there will be no shadow-banning, throttling, demonetization, or tampering with algorithms for political manipulation,” Trump added. “We will not utilise people as test subjects in social experiments or label alternative viewpoints as ‘disinformation.'”
Truth Social Launches
Truth Social, a network billed as a Twitter alternative, was supposed to debut on Presidents Day, which occurs on Feb. 21.
It is currently available to Apple customers, though it has not yet been fully rolled out. Following the launch, some users reported having trouble checking in, registering accounts, and being placed on the waitlist. In an update, the platform stated that it had “stabilised the account creation process” and that it was “trying to increase the rate at which new accounts are created.”
“We are currently rate-limited on onboarding new members to the platform due to the enormous demand upon launch,” an earlier statement stated.
It comes after Trump sent his first message on the new platform’s test version.
In a statement published on Twitter by his son Donald Trump Jr last week, he said, “Get ready! Your favourite president will see you soon.”
Users can follow others and current topics on the Truth Social app, which is aimed towards conservatives. Users will send out a “TRUTH” instead of a tweet.
It’ll be the first step in a three-step rollout of Trump Media products. Following that, the TMTG+ subscription video-on-demand service will be launched. Finally, the company wants to start its own podcast network.
In an investor presentation, the company predicted that by 2022, Truth Social would have 16 million users and 800,000 monetizable users.
Truth Social’s average revenue per user is expected to reach $13.50 by 2026, according to the corporation. By then, it hopes to have 81 million users. In comparison, Twitter’s current average revenue per user is $23.76, according to the company.
By 2026, it expects 40 million TMTG+ subscribers. In that year, the average monthly charge per subscriber is expected to reach $9.
Trump Media Makes These Moves
As it prepares for its big launch, Trump Media & Technology Group has announced a series of announcements.
It announced $1 billion in institutional investments on December 4th. The funds will be received once the transaction is completed.
“This sends a powerful message to Big Tech that censorship and political discrimination must end,” Trump added.
“America is ready for Truth Social,” he continued, “a platform that will not discriminate based on political philosophy.”
It was announced on Dec. 6 that Congressman Devin G. Nunes will be joining the firm as CEO.
In December, the company also announced a relationship with Rumble, a video streaming service.
Rumble and Trump Media have a “wide-ranging technology and cloud services arrangement,” according to Trump Media. It will run a portion of the Truth Social network as well as TMTG+, the company’s video-on-demand service.
DWAC Stock Has To Clear This Hurdle
In a December filing, the business also stated that the Securities and Exchange Commission and the Financial Industry Regulatory Authority had requested information about stock trading and communications prior to the announcement of the merger.
Sen. Elizabeth Warren, D-Massachusetts, had called for an investigation by the Securities and Exchange Commission.
She questioned whether the firm and Trump “may have committed securities violations by holding secret and hidden negotiations about the merger as early as May 2021, while omitting this information in SEC filings and other public statements,” in a letter.
The SEC and FINRA began their investigations before Warren filed her request, according to DWAC records.
In prospectuses, the corporation said that “substantive conversations, directly or indirectly, with any business combination target” had not taken place.
DWAC Stock Analysis
The IBD Stock Analysis reveals the stock’s underlying flaws.
The stock now has a Relative Strength Rating of 99, putting it among the top 1% of stocks in terms of market performance over the last year.
However, it is still significantly behind its all-time high of 175, which it hit on Oct. 22. It is currently worth little about half of that. So far this week, the stock has lost nearly 15% of its value.
The debut of Truth Social on February 22 increased the stock, which is now trading above its short-term moving averages.
The stock rose to stratospheric heights due to the Trump craze before plummeting.
The CAN SLIM elite, on the other hand, seek out stocks with a track record of continuous earnings growth. This is where the DWAC stock fails to deliver. It gets an EPS Rating of 8 out of 99 due to its lack of earnings.
Furthermore, there are no analyst profits forecasts for the ultimate Donald Trump stock in the future.
This is a completely speculative play because the company has yet to properly roll out a product. It’s a wager that the company will be able to convert its excitement into profits.
While this is undoubtedly conceivable, there are numerous obstacles to overcome. Not to mention the reality that Trump will be competing in a field dominated by behemoths like Facebook, Twitter, TikTok, and Snap (SNAP).
Institutional mood, on the other hand, is improving. It has an A Accumulation/Distribution Rating, indicating that it has had a lot of buying in recent weeks. However, overall fund ownership has not changed.
At the moment, the Reynolds Blue Chip Growth Fund (BRCGX) is likely its most notable holder.
DWAC Stock No Ordinary SPAC
So far in 2022, companies that went public through mergers with special purpose acquisition companies have suffered.
As the Federal Reserve tightens its accommodating policies, speculative stocks have been punished in general.
However, DWAC has consistently outperformed other SPACs. According to SPAC Research, it is the best-performing SPAC stock ever.
It’s worth noting that, according to University of Florida IPO expert Professor Jay Ritter, SPACs have lagged the overall market by 25% over the last decade.
SPACs, according to MSCI, can go public faster and for less money, with “much less regulatory or investor scrutiny.” They’re also more likely than traditional IPOs to be run by a controlling shareholder.
“In most other respects, however,” analyst Nilufar Kuchimova wrote in a research note, “investors in these SPAC combination businesses faced roughly the same corporate governance risks as investors in any other recent IPO.”
Is The Ultimate Donald Trump Stock A Buy Now?
Buying DWAC stock right now is more comparable to gambling than investing. The company has no earnings history to speak of, and its stock has had a wild ride.
There is still a chance that the acquisition will be halted in its tracks due to an ongoing SEC probe. At this time, DWAC stock is not a good investment.
IBD Stock Lists, like the IBD 50 list of top-performing stocks, are a good place to seek for actual market leaders.