DWAC - Fox News Joins Truth Social App Giving DWAC Stock a Jolt
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Digital World Acquisition (NASDAQ:DWAC) stock is rallying today after Fox Corporation’s (NASDAQ:FOX) Fox News reportedly joined Truth Social. The social media website is part of former President Donald Trump’s Trump Media & Technology Group, which has agreed to merge with Digital World. While today’s news is certainly very positive for Truth Social and DWAC stock, I do not recommend buying its shares at this point.
Fox News is by far the most popular right-leaning media outlet in the U.S. Just during the week of Feb. 7, for example, it attracted nearly 2.4 million primetime viewers, more than double the total audience of Comcast’s (NASDAQ:CMCSA) MSNBC during the same week and more than four times as many as Warner Bros. Discovery’s (NASDAQ:DISCA) CNN during that week.
Fox News’ status among Republicans is generally favorable. According to a poll carried out by Morning Consult in February, nearly 70% of Republicans found the channel “credible.” And as we’ve seen, the channel has a very large audience. Consequently, Fox News can help Truth Social by attracting a portions of its fans to the app.
That is likely to happen because some of its audience will be interested in seeing statements made by the channel and its hosts on Truth Social. Further, Fox’s presence on Truth Social will likely make the app more interesting for conservative users, increasing the chance they will return to the app in the future. Finally, Fox’s decision will probably increase the app’s credibility in the eyes of conservatives.
In a past column on Digital World, I noted that Truth Social had reportedly experienced multiple technical problems during its launch. I haven’t seen any evidence yet suggesting these issues have been eliminated.
What’s making me more apprehensive about DWAC stock is the number of downloads of the Truth Social app has reportedly plunged in recent weeks. Plus, two high-level executives recently left the project.
I still believe Truth Social can overcome its difficulties and become very successful. Indeed, there have been multiple concrete signs of its tremendous potential. Specifically, when it first became available, it was the most-downloaded app in Apple’s (NASDAQ:AAPL) App store. Multiple conservative pundits have said they have seen more engagement with their posts on the app than on Twitter (NYSE:TWTR).
Still, given Truth Social’s technical issues and the other bad news that has emerged in recent days, DWAC stock is too risky to buy right now.
On the date of publication, Larry Ramer 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.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.
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