Strangely, there are people who think former President Donald J. Trump Senior’s (R-Florida) Truth Social has value. Incredibly, investors paid $29.76 for Digital World Acquisition Corp (DWAC) on 12 August 2022.
Digital World Acquisition Corp (NASDAQ: DWAC) is the shell company that owns Truth Social. They describe Truth Social as “America’s Big Tent Social Media Platform.” In reality, Truth Social is the social media outlet Trump and his allies built after Twitter and Facebook threw the former president off their platforms.
They describe Digital World Acquisition Corp as “a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.” The main business Digital World (DWAC) combines with is Truth Social.
Trump Social’s price has been far higher. Mr. Market paid $97.54 for Digital World (DWAC) on 4 March 2022. The share price has been far lower, DWAC began trading at $9.95 on 30 September 2021.
I think DWAC’s only value is its connection with Trump and his political fortunes. To explain, people think Digital World has value because voters could elect Trump president in 2024. Hence, Digital World’s price could rise and fall with Trump’s political fortunes.
For example, Digital World’s stock was trading at $97.54 in early March when several polls claimed Trump could beat President Joseph R. Biden (D-Delaware) in a hypothetical election. For example, the respected Emerson College poll gave Trump a 3-point advantage on 18 March through 20 March 2022.
Is DWAC a Prediction Market?
In contrast, DWAC’s share price fell to $30.16 on 1 August 2022. A July 28 through 1 August YouGov/Yahoo News poll gave Biden a three-point advantage over Trump in a speculative election.
Hence, tracking DWAC’s stock price can show you what investors think of Trump’s electoral chances. Thus, you can consider DWAC a prediction. A prediction market is an effort to gauge popular opinion by asking how many people bet money on an outcome.
Tracking Digital World (DWAC) can show investors what voters think of Trump and his electoral prospects. To explain, some people could buy DWAC shares to buy influence with Trump and other politicians.
What Value Does Truth Social Have?
Truth Social is a tiny player in social media. Statista estimates Truth Social had just 3% of the US Social Media market on 6 May 2022. Around 3% of Social Media users had visited Truth Social, and 2% said they would use it on 6 May 2022.
Although Truth Social could have more usage among some influential group advertisers want to reach, Statista data shows. For example, Statista estimates 5% of US males, 6% of US Millennials, 6% of US College graduates, 9% of US Reddit users, and 9% of US gamers/eSports fans use Truth Social.
However, Truth Social could reach the group Trump cares about most: voters. Statista estimates 22% of US registered voters used Truth Social in March 2022. Additionally, 8% of US registered voters used Truth Social a lot in March 2022.
In contrast, Earthweb estimates Truth Social had two million active monthly users on 27 July 2022. On 4 April 2022, Truth Social had 513,000 daily active users and 1.2 million sign ups. Around 12% of voters aged 35 to 44 used Truth Social, and 28% of voters aged 18 to 34 said they used Truth Social sometimes.
Truth Social was averaging 218,000 downloads a week in the week ending on 24 April 2022, Earthweb estimates.
Digital World is Losing Money
Financial data shows Digital World (DWAC) generates no revenue and loses money. For instance, Digital World reported a $1.86 million cost of revenue and no revenue on 31 March 2022.
In contrast, Digital World reported a negative quarterly gross profit of -$1.86 million and a quarterly operating loss of -$1.91 million on 31 March 2022. Digital World reported a negative quarterly operating cash flow of -$590,000 and a quarterly ending cash flow of $40,000 on 31 March 2022.
DWAC is borrowing money to finance its operations. It reported a quarterly financing cash flow of $30,000 on 31 March 2022. The quarterly financing cash flow fell from $294.67 million on 30 September 2021. Digital World had a Total debt of $30,000 on 31 March 2022. The total debt grew from $8,000 on 30 June 2021.
What Value Does Digital World Have?
Truth Social has a tiny amount of cash. DWAC (DWAC) reported $40,000 in cash and short-term investments on 31 March 2022. The Cash and short-term investments rose from $33,000 on 31 December 2021 and fell from $149,000 on 30 September 2021.
Digital World Acquisition (DWAC) has some value. DWAC had $293.47 million in Total Assets on 31 March 2022. The Total assets shrank from $293.99 million on 31 December 2021 and $294.75 on 30 September 2021. The Total Assets grew from $130,000 on 30 June 2021 and $90,000 0n 31 March 2021.
I consider DWAC a worthless stock in a worthless company. The financial numbers show both Digital World Acquisition and Truth Social are worthless companies that make no money. Smart investors need to avoid these turkeys like the plagues they are.
The only value Truth Social has is its ability to gauge popular faith in Trump’s political ambitions. If Trump does not run for president or returns to Twitter (TWTR). I predict Digital World will lose all its value.