Many marketers say there’s no such thing as bad publicity. Truth Social, President Donald Trump’s media company, is putting that axiom to the test. The firm is set to merge with Digital World Acquisition (NASDAQ:DWAC), enabling Truth Social’s shares to be traded by the public.
Truth Social’s first order of business is to launch a social media app. The company’s stated goal is to create a more tolerant app which respects free-speech principles. The app is willing to host conservatives and other dissidents who have been banned from platforms such as Twitter (NYSE:TWTR) and Alphabet’s (NASDAQ:GOOGL) YouTube.
Truth Social hopes that combining an app which embraces free speech and utilizes the star power of Trump will create an appealing alternative to Twitter.
Truth Social’s Launch Was Marred by Massive Wait Times
Truth Social launched its beta version for iOS on Feb. 21. That was a logical day to launch the app, since it was President’s Day, giving Truth Social a good marketing angle. The launch was also significant since Truth Social had previously hinted at going live on Feb. 21.
However, there were rumors and suggestions that the app was going to be delayed until the end of March. So launching in February, right on time, appeared to be a validation of Truth Social’s engineering and design capabilities.
But the app’s debut didn’t go perfectly. In fact, the vast majority of people who tried to sign up for Truth Social were put on a waiting list. Now, almost two weeks later, many people who signed up for Truth Social on Feb. 21 still haven’t been able to access the app. Meanwhile, Truth Social’s rank in Apple’s App Store has slid from near the top into the 50s as some of the initial excitement over its launch fades.
A Tricky Decision
Truth Social had a difficult choice. It could either launch on time with bugs or delay its debut and try to get everything perfect before opening up for business. There were clear benefits and drawbacks to both approaches.
On the plus side, the app is live and starting to build momentum among consumers through word-of-mouth. The huge wait needed to join the app could create more demand for it, in the same way that a restaurant or nightclub generates interest when many people are waiting to get into it.
On the other hand, it’s generally advisable for content providers to recruit users during their debuts, when interest in them is high. If consumers can’t start using Truth Social immediately, they may never come back to it. Indeed, there’s a real risk of causing some people who are interested in the application to permanently abandon it. The app’s sinking ranking on the app store provides evidence to support this hypothesis.
Ultimately, though, if popular content creators join Truth Social and create engaging posts, many people will use the app. The elephant in the room is former President Donald Trump’s political future. His entrance into the 2024 presidential contest would be a huge, positive driver for the website.
But if he decides not to run, Truth Social’s growth would be tremendously stunted. For better or worse, Trump was one of the most popular, controversial figures on all of Twitter before he was banned from it.
The Verdict on DWAC Stock
The bottom line is that DWAC stock is likely to live or die, at least in its early stages, based on the popularity of Trump, its key attraction. Traders who have a bullish view of Trump’s prospects may find DWAC stock compelling, despite Truth Social’s growing pains and initial launch issues.
It’s easy to be skeptical about DWAC stock given its high valuation and uneven product launch . But Truth Social has certainly generated a ton of buzz and has a reasonable shot of succeeding.
However, the stock’s outlook is highly uncertain, and, with the shares up near $100, traders may want to lock in some of their profits . Don’t be surprised, though, if Truth Social continues to confound its skeptics by generating an impressive number of app downloads and other positive user engagement metrics.
On the date of publication, Ian Bezek 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.