Digital World Acquisition Corp Stock News and Forecast: DWAC stock slumps as Tesla boss Elon Musk takes TWTR

DWAC stock fell sharply on Monday as news broke that a key rival had just potentially moved into its territory. Elon Musk's offer for Twitter was accepted as the $54.20 cash offer proved too tempting for the Twitter board. Only last week the Twitter board appeared to reject the offer when adopting a strong poison pill defense. This was aggressive and an attempt to buy time, but with no other offer looking likely, Twitter fell into the arms of Elon Musk.

TWTR stock closed up at $51.70 for a 6% gain on the day on Monday. The offer price is $54.20 and with no battle insight, it is normal for shares to trade at a discount to the takeover offer price. This reflects the risk of the deal falling through. 

DWAC stock news: Why does Twitter takeover hurt DWAC stock?

A question we have been seeing quite a lot. Simply put DWAC, or Truth Social, is seen as an alternative to Twitter. When former President Trump was banished from Twitter it increased the potential market for his alternative Truth Social app.

As a recap: Digital World Acquisition Corp is the Special Purpose Acquisition Vehicle (SPAC) that is set to take former US President Donald Trump's Trump Media & Technology Group (TMTG) public to the stock exchange. The SPAC deal is scheduled to complete sometime this year. TMTG owns the Truth Social media platform.

With former President Trump having a huge Twitter following and a huge fan and voter base, Truth Social was in line for a strong launch. Now, however, it appears Elon Musk sees Twitter as more open and is less likely to ban people from it. This naturally makes it more of a threat to Truth Social and DWAC stock by definition.

Elon Musk has already said he favors being able to edit speech on Twitter and appears in favor of suspensions rather than outright bans. Musk is a free speech devotee. This could entice a large cohort of users and Trump supporters back to Twitter. That is why DWAC stock has been pressured since it looked more likely that Elon Musk would succeed in his quest for Twitter.

DWAC stock forecast: What does President Trump think of Twitter?

So where now for DWAC stock? Former President Trump has committed to Truth Social as he commented on the Elon Musk Twitter takeover on Monday and committed himself to Truth Social and by extension DWAC stock. Trump told Fox News:

"I will be on Truth Social within the week. It's on schedule. We have a lot of people signed up. I like Elon Musk. I like him a lot. He's an excellent individual. We did a lot for Twitter when I was in the White House. I was disappointed by the way I was treated by Twitter. "I won't be going back on Twitter (...) The bottom line is, no, I am not going back to Twitter (...) We’re taking in millions of people, and what we’re finding is that the response on Truth is much better than being on Twitter. Twitter has bots and fake accounts, and we are doing everything we can.”

This has been good enough to push DWAC stock up 5% in Tuesday's premarket.

DWAC stock chart, daily