Why Digital World’s acquisition stock skyrocketed 26% in February

What happened

Shares of Acquisition of the digital world (NASDAQ:DWAC) gained 26% in February, according to data from S&P Global Market Intelligence. Shares of the special purpose acquisition company (SPAC) gained ground ahead of and after the release of Trump Media & Technology Group’s (TMTG) Truth Social app, which is led by CEO Devin Nunes and Chairman Donald Trump.

Digital World Acquisition is set to take Trump Media & Technology Group public through a merger, and the latter company’s relatively strong social media platform debut has helped drive the stock price higher. SPAC stock. Truth Social, which positions itself as a competitor to Twitter and other platforms, launched on February 21 and helped fuel a continued bull run for the stock.

So what

After its release last month, Truth Social quickly rose to the top of the free app download charts on Applefrom the App Store. Despite bugs and crashes in its early days, the social media platform appears to be off to a strong start in terms of user engagement, and Digital World Acquisition stock is now up around 90% on exchanges of 2022.

Image source: Getty Images.

Now what

Shares of Digital World Acquisition continued to gain ground in early March trading despite the sell-off in many other growth-reliant software stocks. The company’s stock price is up about 2.6% in the month so far.

DWAC chart

DWAC data by YCharts

Even with the recent launch of Truth Social, investors still have relatively little visibility into TMTG’s business operations and financial fundamentals. Many SPAC stocks also saw turbulent trading after their mergers were completed. This momentum has seen Digital World Acquisition see some volatile swings in the coming months, but it’s also possible the stock will continue to post strong gains if Truth Social and other services continue to attract users and grow. show strong engagement metrics.

In addition to Truth Social, Trump Media & Technology Group has announced plans to launch a subscription video service, dubbed “TMTG+”. According to a filing with the Securities and Exchange Commission, the upcoming streaming service will feature “entertainment programs, news, podcasts, and more.” unawakened”.

With several fledgling services, it’s possible that TMTG is still in the early stages of a much larger growth story. However, the lack of visibility on the young social media company and the potential for post-merger volatility due to substantial new stock offerings and other factors mean that Digital World Acquisition remains a risky investment even if it could post bigger gains.

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Keith Noonan has no position in the stocks mentioned. The Motley Fool owns and recommends Apple and Twitter. The Motley Fool recommends the following options: $120 long calls in March 2023 on Apple and short calls $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.

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