Out of everything that happened on Thursday, easily the biggest piece of financial news had to do with Digital World Acquisition (NYSE: DWAC). Shares of the special purpose acquisition company (SPAC) skyrocketed over 400% on Thursday after making a deal with former President Donald Trump regarding his new social network platform.
The Trump Media & Technology Group said that it would unveil a new social medial project aimed at supporting free speech. The project, called Truth Social, would aim to fight against mainstream platforms like Facebook and Twitter, both of which restricted Trump’s access to either platform following the January 6th Capitol Hill incident. Since then, Trump has aimed to create his own network, where it’s expected millions of his former Twitter followers will migrate.
The new social media platform will launch sometime next month for a small list of invited users, while nationwide access is expected to start in early 2022. The company also said it hopes to create a subscription video-on-demand service, somewhat similar to YouTube Premium.
“I created TRUTH Social and TMTG to stand up to the tyranny of Big Tech,” said Trump. “We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable.”
However, some critics are arguing that Trump’s social media project will face similar struggles that other conservative-based social media apps have faced. This includes websites like Parlor and Gab, some of which have been kicked off the Apple store and Amazon Web Services for a time following the January 6th incident.
Additionally, there have been claims that the Truth Social app has already been hacked. Tech reporter for the Washington Post, Drew Harwell, claimed that he was able to register under former Vice President Mike Pence’s name. Others on social media have made similar claims, although the platform still seems to be under some degree of development.
Regardless of whether the platform will be a success or not, it’s clear that this will be a stock that will have plenty of volatility surrounding it. It’s also because of this year’s influx of meme stock traders, who always eager for a new stock to jump on. In the past weeks, it’s been a relatively quiet period for social media traders, with companies like AMC and GameStop staying relatively quiet.
At the time of the announcement, the SPAC deal with Digital World Acquisition was estimated at around $400 million. However, with shares skyrocketing in a single trading session, the new company is worth well over $1.5 billion in market cap. Its possible shares will keep going up on Friday, although a big sell-off is possible as well as traders look to lock in their gains.
Other social media stocks, like Twitter and Facebook, didn’t move much on the news. However, both are down a few percentage points in pre-market trading. However, it seems this has more to do Snap, which reported a big revenue Q3 revenue miss after the markets closed on Thursday. We might see more losses from social media stocks tomorrow as well.
