DWAC Stock Forecast 2025: Can Trump’s Social Media Take on Big Tech?

Mohit Oberoi, CFA - Author
By

Feb. 22 2022, Published 10:40 a.m. ET

Digital World Acquisition (DWAC) stock opened sharply higher on Feb. 22. The SPAC is taking former U.S. President Donald Trump’s TMTG (Trump Media and Technology Group) public. While other social media stocks like Facebook and Twitter have plunged and are trading close to their 52-week lows, DWAC stock has been in an orbit of its own.

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In a world where most SPACs and de-SPACs are trading below the IPO price of $10, DWAC is trading at a massive premium. Amid the sell-off in growth stocks, rising inflation, and Russia-Ukraine tensions, nothing seems to bother DWAC investors. What’s the forecast for DWAC stock and how can high Trump’s social media stock go by 2025?

Why is DWAC stock going up?

Trump’s TRUTH Social has launched on the Apple App Store. The app was offered to a small set of subscribers who had pre-ordered. Others have been kept on a waitlist. DWAC stock is going up amid optimism about the launch, even though many people have ridiculed the app for its similarity to Twitter.

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When will TRUTH Social be on Android?

While TRUTH Social has launched on the Apple App Store, it hasn't gone live on the Google Play Store. Many enthusiasts wonder about the timeline of an Android launch. Not many details are available, which has been the case with DWAC and TMTG as well. TMTG CEO David Nunes, who left Congress to join Trump’s media company, expects the app to be “fully functional” by March.

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What's DWAC's stock forecast in 2025?

Since DWAC will be merging with TMTG, its forecast depends on the latter. So far, TMTG isn't generating any real revenues. However, the company has massive plans and wants to compete against other big tech companies including Facebook, Twitter, Netflix, Disney+, and Amazon.

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The company intends to defend free speech in what it believes is a world dominated by liberal social media companies. While the platform is generating a lot of interest among conservatives, the company says that it welcomes all people irrespective of their political ideology.

TMTG expects its revenues to surge in the long term.

Like fellow SPAC mergers, TMTG is also projecting a steep rise in its revenues in the coming years. It expects to post revenues of $1 million in 2022, which is expected to rise to $1.84 billion in 2025. The company expects the have 69 million users by 2025 of which it anticipates over a quarter would be monetizable. TMTG expects to have 23 million subscribers by 2025 with an average monthly fee of $8.

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Is DWAC stock overvalued?

The merger with DWAC valued TMTG at an equity value of $2.25 billion. DWAC is trading at almost $100, which gives us a current proforma market cap of over $22 billion. Twitter's market cap is just around $27 billion.

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It isn't the first time a pre-revenue company is commanding a multi-billion-dollar valuation. In 2021, Lucid Motors and Rivian listed and commanded huge valuations despite being pre-revenue companies.

Rivian’s market cap surpassed $150 billion at one point. Since then, it has plunged and the stock trades below the IPO price.

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Coming back to DWAC, it's ultimately a play on Trump and the enthusiasm among his supporters. Trump had almost 89 million Twitter followers before he was banned and most of them are potential targets for TMTG.

Trump's social media is trying to capitalize on the conservative anger in what they see as suppression of their voice by big tech companies. Will the anger lead to revenues and profits for TMTG and justify its over $20 billion valuation? We’ll have to wait and see, but it won't be easy for Trump to monetize his massive fan following.

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