The social media world is preparing for a once-in-a-generation catalyst. As soon as Feb. 21, investors are getting ready for former President Donald Trump’s Truth Social to launch. After Twitter (NYSE:TWTR) and Meta Platforms (NASDAQ:FB) removed the former president from their platforms, Trump has been cooking up a return to social media. October 2021 brought big news on this front. Investors learned about Truth Social, and that its parent company Trump Media and Technology Group (TMTG) was coming public. Its blank-check partner Digital World Acquisition (NASDAQ:DWAC) has shot up to unprecedented levels. This turn of events placed DWAC stock in the spotlight. It also has created new interest in alternate social media stocks.
Now, the launch of Truth Social could be just a few weeks away. DWAC stock continues to trend, outperforming other SPAC stocks. Alternate social media stocks are also catching a lift from retail investors.
So, with this catalyst in mind, here are six stocks to watch now:
- Digital World Acquisition (NASDAQ:DWAC)
- CF Acquisition VI (NASDAQ:CFVI)
- DatChat (NASDAQ:DATS)
- Paltalk (NASDAQ:PALT)
- Nextdoor (NYSE:KIND)
- Palo Alto Networks (NASDAQ:PANW)
Social Media Stocks: Digital World Acquisition (DWAC)Source: Joseph Sohm / Shutterstock.com
It goes without saying that TMTG’s SPAC partner will be the first to benefit from Truth Social.
The stock shocked markets when it skyrocketed 90% overnight, giving rise to so-called Trump trades. Since then, investors have heralded DWAC stock as one of the breakout stocks of 2022. Although some experts, such as InvestorPlace contributor Mark Hake have hypothesized that it is likely at full value, there is plenty of potential for growth in the short term.
As InvestorPlace contributor Thomas Niel stated, “Excitement for the upcoming launch of Trump Media’s main platform, social media site Truth Social may be enough to keep shares steady.” Niel does not advise investors to go all in, but he too is confident in the short term.
But what does that mean? In this case, short term means until the Truth Social platform goes live. The long-term success of the stock will largely depend on the success of Truth Social. There are many possibilities for the platform, but in the weeks leading up to its launch, the momentum alone will help it stay elevated.
CF Acquisition VI (CFVI)Source: Tada Images / Shutterstock.com
After the rise of DWAC, a new Trump trade quickly began making headlines. CF Acquisition is the blank-check partner of Rumble, a Canadian video sharing platform that aspires to be the next YouTube.
Conservative figureheads such as Sen. Rand Paul and pundit Dinesh D’Souza have embraced the platform’s anti-censorship policies. Rumble’s decision to go public via a SPAC sparked plenty of interest in the wake of DWAC’s rise. When the company agreed to serve as Truth Social’s streaming partner, CFVI stock shot up immediately.
That type of partnership puts CFVI in a position similar to that of DWAC. Its future in the stock market is largely dependent on the success of Truth Social.
Although Rumble has received a fair bit of media exposure and has attracted prominent users, it faces increasing competition. As long as Truth Social continues to generate momentum in the alternate social media space though, CFVI stock is one to watch.
Social Media Stocks: DatChat (DATS)Source: Shutterstock
Social media stocks to watch ahead of Truth Social’s launch go beyond Trump trades.
Alternative platforms that allow users to connect and share will also be able to ride the wave. DatChat has gained notoriety in recent months as a social media option for those seeking a platform that prioritizes data privacy and protection. Its use of blockchain technology makes this possible, and it has resonated with retail investors.
Additionally, DatChat has been making moves to expand its blockchain holdings. It recently acquired Avila Security Corporation, and with it, assets in the area of digital rights management and file-sharing technology. Investors had plenty of reason to be optimistic about DATS stock already. With the Truth Social momentum helping push social media alternatives upward, they can expect to see its growth continue.
Paltalk (PALT)Source: East pop / Shutterstock.com
Just as CFVI often moves in solidarity with DWAC, DATS has a peer as well. It’s Paltalk, which is also an alternative social media platform, built to connect people in a safe environment. The app focuses on video chat and emphasizes its community aspect. Although it was touted as a likely short squeeze candidate in October 2021, PALT has another catalyst in the Truth Social launch.
While DAT and PALT don’t have the ties to Trump that CFVI and DWAC do, they have the real-world utility to keep rising after the initial Truth Social hype dies down. The focus on social media alternatives in the weeks to come will certainly help them rise in the short term, too. While PALT hasn’t received the same amount of attention, it is certainly worth watching.
Social Media Stocks: Nextdoor (KIND)Source: Tada Images / Shutterstock.com
If it’s true that all politics are local, Nextdoor is an app with which every politician should be concerned.
To say that the alternative social media platform is community-focused would be an understatement. Nextdoor provides users with a social network that focuses on their own neighborhood. “It’s how to get the most out of everything nearby,” the company website states. Any app that allows users to connect with those physically close to them and keep tabs on events specific to their community could certainly gain a following in the political world. And the momentum generated by the launch of Truth Social may provide the attention it needs to catch the eye of election professionals.
InvestorPlace contributor Ian Bezek describes Nextdoor as a “unique social network that needs to prove its financial merit.” While it’s true that the recent SPAC wasn’t welcomed by Wall Street, it could easily find its footing. Fellow InvestorPlace contributor Stavros Georgiadis recognized KIND stock’s potential in late 2021.
While the market isn’t great for deSPAC stocks right now, Nextdoor has a unique tie to the Truth Social catalyst. As a hyperlocal social media platform that helps users engage in new ways, it could benefit from a renewed interest in alternates to Big Tech platforms.
Palo Alto Networks (PANW)Source: Sundry Photography / Shutterstock.com
The last name on this list of social media stocks to watch doesn’t quite fit with the rest.
Nevertheless, Palo Alto Networks is a company that deserves mention. It is a leader in the cybersecurity space, with a footing in almost every section of the field. Cybersecurity companies have seen plenty of growth this year, but Truth Social’s rise has helped serve to highlight their utility. Within hours of the platform’s announcement in October 2021, it was hacked. While the network’s protocols have doubtless been tightened, eyes will be on the cybersecurity field as the important launch draws near. And Palo Alto Networks is usually one of the first names to come up in any cybersecurity discussion.
Even more relevant is the role Palo Alto plays as a VPN provider. These solutions allow users to access social media platforms that may have country restrictions. With consumers seeking out new platforms, VPNs could open even more doors.
Wedbush analyst Dan Ives recently named it to a list of stocks to buy on any dip. It has recently been hailed as a Wall Street favorite and a top cybersecurity stock to buy for 2022. The intersections between politics and cybersecurity should not be understated.
As Truth Social’s debut approaches, the platform will draw focus to the cybersecurity sector and when it does, PANW will be at the forefront of the pack. For that reason, it belongs among social media stocks to watch as this all-important catalyst approaches.
On the date of publication, Samuel O’Brient 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.
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