What happened
Shares of Digital World Acquisition (DWAC +0.00%) managed to post big gains in January despite big sell-offs hitting the broader market. The Donald Trump-backed special purpose acquisition company (SPAC) saw its share price climb 42.1% in the month, according to data from S&P Global Market Intelligence.
DWAC data by YCharts.
Digital World Acquisition is set to take Trump Media & Technology Group (TMTG) public through a merger, and the SPAC stock has been gaining ground amid excitement for its merger partner's upcoming social media platform. TMTG's Truth Social is being positioned as an alternative to Twitter and other top social media platforms, and signs pointing to a Presidents Day release for the new service helped spur big gains for the stock last month.
Image source: Getty Images.
So what
Truth Social's application profile page on Apple's App Store was updated on Jan. 6 and seemed to point to the service launching on Feb. 21: Presidents Day. The update kicked off a stretch of gains for Digital World stock, and the company's share price also appears to have gotten a big lift from a rally Trump hosted in Arizona on Jan. 15. Some investors and analysts interpreted the rally as an indication that Trump plans to run for president again in 2024, and it's possible that another campaign could help spur engagement for Truth Social.
Digital World Acquisition's stock gains last month look even more impressive in the context of the big sell-offs that hit the broader market. The S&P 500 closed out January down 5.3%, and the even more tech-heavy Nasdaq Composite index ended the period down 9%.
Now what
Digital World Acquisition stock has continued to gain ground this month despite market volatility stemming from Big Tech earnings. The SPAC stock is up roughly 1.2% in February so far.
DWAC data by YCharts.
After Meta Platforms published very disappointing fourth-quarter results and guidance, Trump made statements suggesting that the social media giant was seeing users leave due to anticipation for Truth Social. With TMTG's social platform still weeks away from its expected debut, it's unlikely that the upcoming service had any material impact on Meta's performance, but anticipation for Truth Social does seem to be driving Digital World Acquisition stock higher.
The SPAC's share price could soar if Truth Social goes on to be a hit, but investors should move forward knowing there's not much visibility on the platform's outlook. As for the merger, Digital World's combination with Trump Media & Technology Group will likely be completed in the near future, and the combined companies will then operate and trade on Nasdaq under the TMTG ticker.
