It’s Time to Bet Against Digital World (DWAC) Stock. Here’s Why.

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Today, the eyes of the nation are on an important story. Former President Donald Trump has been indicted on criminal charges for the second time this year. While his fate still remains unclear, the airwaves and internet have been buzzing. Experts are offering many possible scenarios as to how this historic legal event will play out. Most of them don’t end well for the twice-indicted president.

While Trump’s fate hangs in the balance, the future of his social media platform Truth Social also appears highly questionable. It’s no surprise that Digital World Acquisition Corp (NASDAQ:DWAC) would be reacting poorly to the news. The blank-check partner of the Trump Media & Technology Group hasn’t traded well in a long time, but now the dark cloud hanging over DWAC stock is too big to ignore.

Regardless of how Trump’s legal problems proceed, DWAC stock will struggle as the man responsible for Truth Social’s success faces criminal charges. Some conservative media stocks may see a slight bump, but this won’t be one of them.

The End of the Line for DWAC Stock

This is by no means the first time DWAC stock has faced problems. Ever since Truth Social launched, the company has only seen negative catalysts. From declining interest in the app to a long list of regulatory probes, the headwinds it has faced would make most investors nervous.

More recently, it struggled as speculation rose that it could be delisted from the Nasdaq. Even the bump it received when Trump entered the 2024 presidential race didn’t do much. In that, we see just how difficult the economic landscape is for this troubled company.

Trump isn’t CEO of Truth Social, but — make no mistake — he is the engine keeping it in business. He is essentially the “man behind the curtain” that everyone should be paying attention to.

Now that his legal problems are getting more serious, Trump’s legal team may advise him to stop using the app. If Trump isn’t posting on Truth Social, traffic will drop off even more than it already has. DWAC stock suffered during the first indictment and this one seems even more serious. Per the New York Times:

“The 49-page indictment, containing 37 counts and seven separate charges against Mr. Trump, gave the clearest picture yet of the files that Mr. Trump took with him when he left the White House. It said he had illegally kept documents concerning ‘United States nuclear programs; potential vulnerabilities of the United States and its allies to military attack; and plans for possible retaliation in response to a foreign attack.’”

More updates are still being provided, but one thing is unquestionably clear: Trump isn’t going to be able to shake these legal charges easily. And while he struggles against them, DWAC stock will suffer as uncertainty rises regarding its future.

Why It Matters

After Trump’s first indictment, InvestorPlace reported that stocks directly linked to him had the most to lose if his legal woes continued. As they have only gotten worse, the future looks even more grim for DWAC stock and its Trump-trade peers.

The short sellers will likely close in on Digital World, flagging it as a company in a race straight to the bottom. If anyone is still holding it, the time to sell DWAC stock is now.

On the date of publication, Samuel O’Brient did not hold (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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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