Digital World Could Still Be a Buy Despite Musk’s Twitter Buyout

Stocks to buy

The former President Donald Trump-backed Digital World Acquisition Corp. (NASDAQ:DWAC) has been quite the rocky ride for investors. As early as March, DWAC stock, the special purpose acquisition company that is set to acquire the company and its app Truth Social, had been trading at a high of nearly $100. It has since dropped more than 50% of its value. The stock is now trading around $47, which is close to its support level of $40.

This would have made quite the decent trade a few months ago. DWAC stock had a compelling story. Truth Social has attempted to carve out a niche for itself as the free speech social media platform. So, fundamentally, there could be enough hype to justify the bounce back up.

However, things have changed. The world’s richest man, Elon Musk, has made a bid to buy Twitter (NASDAQ:TWTR). Musk also has a strong view on freedom of speech and has made his intentions known to liberalize Twitter’s censorship rules. This puts Truth Social in a precarious situation as it is still a fledgling company.

Despite the change in the landscape, there are still plenty of positives for Truth Social. Last week, the company’s app shot up to the very top of the U.S. app store rankings. Out of all free iPhone apps, Truth Social’s app had the most downloads and installs. Surprisingly enough, Twitter was the second most downloaded.

The increase in downloads can be pinned down to two key factors. First is the resolution of the technical issues facing the platform. Until recently, there was a long waitlist to join the platform. The company’s app will soon be available on Web browsers, as well. The other factor is Trump announcing that he wouldn’t be returning to Twitter even if allowed back. This is despite Musk buying the company and promising a radical overhaul.

What does this mean for traders? DWAC stock is now correlated to the fate of Musk’s Twitter buyout. There could be a bit of a pop on the stock should news surface of any snags in the Twitter deal.

On the date of publication, Joseph Nograles 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.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.

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