Wednesday, May 29, 2024
Stock Market

Why Is Digital World (DWAC) Stock Down 8% Today?

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Boy, that was a letdown for shareholders in Digital World Acquisition Corp. (NASDAQ:DWAC). Today, shares of DWAC stock sunk more than 8% following a very underwhelming announcement from President Trump.

As we reported yesterday, former President Donald Trump announced via a Truth Social post that a “major announcement” was set for today. With investors’ imaginations running wild, a whole assortment of scenarios began to circulate. For investors in DWAC stock, the hope was that some sort of positive news would be put forward for this special purpose acquisition company (SPAC) tied to its merger to bring Truth Social public. Others were hoping for some news about the former President running for reelection in 2024.

Nope. This announcement happened to be a tease for a digital trading card release.

Let’s dive into what was announced, and why investors in Digital World feel so let down today.

A Nothing Burger for DWAC Stock

Theoretically, any sort of announcement tied to Trump’s potential campaign or his SPAC deal would have done wonders for this stock. That’s why it surged in anticipation of today’s announcement.

Unfortunately, all investors received today was news that a digital art collection would be released, highlighting Donald Trump’s life and career. While exciting for some, for investors in this SPAC, this news really amounts to a nothingburger.

The delayed SPAC deal to bring Truth Social public has garnered significant attention among many investors. This highly-politicized deal saw a boom-bust that was greater than many SPAC deals this year — and that’s saying something.

Digital World’s 52-week high of more than $100 per share stands in stark contrast to its current price of less than $20. Thus, investors who bought in at the peak are seriously underwater, with new investors questioning whether this deal will go through.

Moving forward, DWAC stock appears to be among the more speculative picks in the market right now. The volatility we’re seeing on a daily basis will be amplified by such a stock. Accordingly, investors with any sort of concerns about capital preservation may want to look elsewhere right now.

On the date of publication, Chris MacDonald did not have (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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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