Digital World Acquisition (DWAC) stock price has done well over the years. It has surged by more than 277% from its lowest point in 2023, giving it a market cap of more than $6 billion. The current valuation means that Donald Trump’s stake in the combined company will be over $3.5 billion since he will own a 60% stake.

DWAC

DWAC stock price

DWAC will be different from DJT

Digital World is expected to merge with Trump Media as soon as next week. After the merger, the combined combined company will change its ticker from DWAC to DJT, or Donald John Trump.

DJT will be significantly different from DWAC. For one, as a publicly-traded company, it will need to deliver quarterly reports showing its revenues, profits, and the number of users. 

This is one of the main reasons why DJT stock will struggle in the long term. The reality is that Truth Social has failed to gain traction in the past few years. The most recent results shows that it has made just $5 million in revenue since 2021. 

It has lost millions of dollars more, which is understandable since it needed to spend substantial sums of money building the product and marketing. The other reality is that Truth Social will continue burning cash for a long time.

Unlike other social media companies, it faces a major challenge gaining enough mainstream advertisers. In most cases, big advertisers have avoided right wing platforms, including Fox News, Rumble, and Gab.

Truth Social, unlike other social media players is mostly a political platform. In most cases, social media platforms thrive because of other types of content like entertainment. Politically, X (Twitter) has done well over the years for being a big tent with both left and right-leaning people. 

The other big challenge is that Trump is in a financial hole as his legal woes mount. He has struggled to pay his huge legal bill in New York. Therefore, there is a likelihood that he will turn to his liquid DJT stock to raise cash when the lock-up period ends. 

DJT stock price forecast

Therefore, in line with this, I believe that the DJT stock price will have a good performance in its early days. This will happen as Trump fans boost its performance in the stock market and as the election hype intensifies.

In the long-term, however, I suspect that the stock will be a disaster as the company’s performance becomes public. 

Unless something big happens, investors will see a company that has a negligible market share in the social media industry. They will also see a company that is burning cash fast and one that is highly politicised.

Most importantly, investors will see a company that is severely overvalued. It is easy to explain this. Estimates are that Twitter is now valued at over $20 billion while Snap has a market cap of over $18 billion. 

Reddit is going public at a $6.4 billion market cap. There is zero chance that Truth Social, a platform that has minimal users has a similar valuation to Reddit.

Therefore, my view is that DJT will jump sharpy amid the meme stock frenzy followed by a sharp decline in the long term.

By Crispus Kanyaru

With a keen eye for market trends and a knack for translating complex financial concepts into engaging narratives, Crispus has established himself as a trusted voice in the world of finance. His work has graced the pages of esteemed publications like Benzinga, Forbes, Invezz, and Banklesstimes, reaching a diverse audience eager to navigate the ever-evolving financial landscape. Crispus's journey began with a deep curiosity about the forces shaping the global economy. This natural inquisitiveness led them to pursue a degree in finance and CPIA, equipping them with a solid foundation in financial theory and analysis. But Crispus knew that knowledge alone wasn't enough. He craved to bridge the gap between dry data and real-world experiences, to make finance accessible and relatable to everyone.

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