It seems that there’s always something going on with the in-progress special purpose acquisition company (SPAC) merger of Digital World Acquisition (NASDAQ:DWAC) and Trump Media & Technology Group (TMTG). As soon as the chatter subsides, more controversial events come along to roil DWAC stock.
In general, it’s a wise practice to avoid mixing politics and investing. Yet, that’s rather difficult when it comes to Digital World Acquisition, which remains one of the most politically charged stocks on Wall Street.
There’s also a free-speech angle to DWAC stock. Reportedly, TMTG will launch Truth Social, a conservative social media platform that says it will emphasize First Amendment rights.
Clearly, there’s a lot to unpack here and we must tread carefully. So, let’s all please keep a cool head and maintain our composure as we delve into a SPAC stock that’s divisive, but also fascinating.
A Closer Look at DWAC Stock
DWAC stock traded near $10 prior to the Oct. 20 TMTG merger announcement. Soon after the SPAC merger announcement, the stock reportedly surged 357% in a single day. It was so wild that trading was halted on the stock multiple times due to its volatility.
Was this due to heavy interest from traders on social-media forums like Reddit? It’s certainly possible that they influenced the movement of the share price.
However, they couldn’t sustain the rally forever. On Oct. 22, DWAC stock peaked at $175. Next, the stock pulled back into the mid-$60’s in late October, and then continued to slide November. Now the stock’s just over $43.
Due to its downward momentum, I don’t recommend buying DWAC stock until it shows signs of stability. In other words, you’ll want to look for some calm, sideways price movement.
I think $20 will be a crucial level and could be a reasonable buy price. But only if the stock isn’t still falling like a rock.
Political Turmoil Persists
Again, it needs to emphasized that DWAC stock is susceptible to political news events. Don’t attempt to trade it simply based on price action or chart patterns. Remember, a major news development has more influence than any lines drawn on a price chart.
These developments could even involve people who aren’t currently working with former President Donald Trump.
In a recent example, former Trump White House adviser Steve Bannon was indicted after defying a congressional subpoena, and pleaded not guilty to contempt-of-Congress charges. The subpoena concerned a House committee’s investigation of the Jan. 6 attack on the U.S. Capitol. Bannon worked in the White House back in 2017. However, the committee is focused on his activities and conversations in the run-up to the events of Jan. 6.
It just goes to show that, when it comes to politics, nothing is completely left in the past.
A Voice for the Unheard
So, if you’re going to invest in DWAC stock, be prepared for event-driven price moves to come from any direction, and any time period. Still, this isn’t an indictment of any particular political organization, or of TMTG.
Freedom of speech is a constitutional right, and Truth Social could provide a voice for commentators from all walks of life.
As an investor, you might or not like Truth Social’s political slant in general. However, there could still be an investment opportunity here.
It still remains to be seen how Truth Social will shape up as a social platform. It’s speculative, no doubt, to wager that it will become popular and will endure.
That’s what’s exciting about DWAC stock, though. If you buy some shares at $20, they could provide 2x, 3x or even better returns someday.
The Bottom Line
Clearly, this isn’t the type of stock you’d want to pour your entire account into. Be prepared for volatility based on unexpected events in the world of politics.
With all of that in mind, you don’t have to shy away from DWAC stock as an investment in a potentially game-changing platform with a free-speech focus.
On the date of publication, David Moadel 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.
This article originally ran on investorplace.com.