Trump’s social network "truth" is online: Are Trump’s DWAC shares a buy now?

• Trump’s social network Truth has been disappointing across the board so far
• Trump’s technology company TMTG has far-reaching plans
• Chances of success of Trump’s plan are very limited

On President’s Day in the USA, February 21, 2022, the app from Trump’s social network “The Truth Social” could be downloaded from the Apple App Store for the first time. In the days that followed, Trump’s network was the most popular app, but just a few weeks later, interest seems to be rapidly declining. Technical problems and low user numbers have made Truth a flop so far. Can Trump’s social media still rise to become a serious alternative to Twitter and meta-subsidiary Facebook in the long term? And what are the chances for the shell company DWAC?

Truth – an alternative to Twitter and Facebook?

On January 8, 2021, two days after the dramatic storming of the Capitol by Trump supporters, Twitter blocked Donald Trump’s account because the ex-president had heated up the atmosphere with aggressive tweets and then did not distance himself from the “demonstrators”. . Since then, Trump has no longer had access to his previously beloved medium. That’s why Trump announced in October 2021 that he would create his own “big new platform”: Truth. According to Trump, this should offer an alternative to Facebook and Twitter and do without the “censorship” of Big Tech companies.

Trump’s SPAC: Digital World Acquisition Company (DWAC)

In order to also bring his social network to the stock exchange, Trump uses a Special Purpose Acquisition Company (SPAC) – a shell company that initially collects capital via an IPO, in a second step to then use it to take over a (previously undetermined) company to invest. For the usually smaller company to be taken over, the cost-intensive official IPO is therefore no longer necessary. In Trump’s case, the SPAC is called Digital World Acquisition Company (DWAC). With their help, the ex-president wants to list his company Trump Media & Technology Group (TMTG), which was founded in February 2021, on the US technology exchange NASDAQ within two years.

DWAC has already raised $300 million from investors. When SPAC announced the planned merger with Trump’s TMTG in October 2021, the share price jumped from its initial price of USD 10 to USD 175. Trump’s SPAC mutated into a meme stock, and the demand from many traders pushed the still less capital-intensive SPAC up. But since then, DWAC shares have been falling steadily. The downward slide was at least temporarily halted in mid-February when Truth went online.

Even Trump hardly uses the network

But so far, Truth has disappointed all expectations: The network does not even have 300,000 users per day and the number of users is also showing a strong downward trend – poison for a social network that lives from the daily exchange of users. After the first days of hype, according to information from “The Guardian” on March 12, Truth was only in 173rd place among the most popular Apple apps, which incidentally cannot be downloaded for the Android operating system, let alone abroad. Perhaps the best evidence of Truth’s failure so far: Trump himself has only published one TRUTH (the equivalent of a tweet on Twitter) so far and therefore seems to hardly use the network personally. The perfidious thing about Truth: The network presents itself as a democratic “Big Tent”, but the network itself must not be criticized, and the “excessive use of capital letters” is also prohibited. “OnlineMarketing” also reports from some users who complain about being banned or censored by Truth. Many media, such as the British newspaper “The Guardian”, rightly speak of a “flop”. Paradoxically, however, Trump has much bigger plans.

Prospects of Trump’s company TMTG: total flop or serious alternative?

The Truth is only the first of several planned parts of Trump’s technology company. In addition to the social network, TMTG will also include a Disney+-style streaming offering, a CNN-style news magazine, and a technology service company competing with Amazon Web Services. If Truth actually reaches 81 million users in 2026 and the streaming service TMTG+ actually reaches the targeted 40 million paying subscribers in the same year, then TMTG could actually be successful thanks to many conservative Trump fans.

But the low popularity and the enormous technical problems of Truth and not least the investigations of the US Securities and Exchange Commission SEC against Trump’s SPAC reduce the chances of success of Trump’s news universe. Moreover, there have already been several unsuccessful attempts at right-wing alternatives in the field of social networks. Michael Larkin from Investor’s Business Daily is also of the opinion that a purchase of DWAC shares is currently not an investment, but rather comparable to gambling – especially since DWAC has not yet posted any profits.

As a result of Truth’s disappointing start, DWAC has already received the first acknowledgment: In the last few days, the share certificate has suffered heavy losses and is currently quoted at USD 68.47 (as of March 30, 2022), not even half as high as in October 2021 It will not be easy for Trump to reverse this negative trend – good news about Truth would be badly needed for that. Otherwise, Trump’s dream of a social network he controls could very quickly be over.

Editorial office finanzen.net

Image Credits: Win McNamee/Getty Images