Financial Associated Press, April 28 (Editor Ma Lan) Trump's media company product True Social suddenly burst into flames, driving the stock prices of related listed companies to rise rapidly on Wednesday, and Musk recently tweeted and ridiculed the newly emerging social platform.
These two former defenders of free speech who "cherished each other" are now fighting on social platforms.
There have been enough dramatic stories about Twitter and Musk itself this month, and I didn't expect that there are still stories involving former US President Trump.
On April 4, Musk disclosed for the first time that he already owned a 9% stake in Twitter and turned around to reveal that he was about to buy Twitter. The Twitter takeover war saw a breakthrough on Monday afternoon (April 25) EST, with Twitter's board of directors agreeing to be acquired in cash by Musk at a valuation of $44 billion.
Trump's social app
On Wednesday (April 27), EST, Musk tweeted that Twitter's competitive product, Trust Social, became the hottest app on the free app list of the US Apple app market that day, surpassing its competitors Twitter and Douyin.
According to Apptopia estimates, Truth Social's downloads jumped to more than 55,000 on Tuesday from less than 6,000 a week ago, and active users also reached 365,000, a 20 percent increase from last week.
This immediately triggered a rise in shares of True Social affiliate Digital World Acquisition Corp., which rose 24% intraday on Wednesday and narrowed to 9% at the close.
SPAC (a special purpose acquisition company) Digital World announced on October 20 last year that it had reached a final merger agreement with Trump Media & Technology Group, with Trump as chairman of the company and former Republican Rep. Devin Nunes as ceo.
However, the merger is still technically subject to review by the Securities and Exchange Association of the United States, or may face the risk of failure.
On February 21, 2022, Digital World released True Social in the Apple Store, but the app has been underperforming due to technical glitches.
After Musk announced in April that he held a large stake in Twitter and intended to acquire it, the stock price of the digital world fell all the way, falling by 22% at one point, and many conservative media people may return to Twitter to make Trust Social no longer attractive.
Matthew Kennedy, market strategist at Renaissance Capital, said at the time that the tweets that Musk owned would weaken Truth Social's raison d'être.
Trump's appeal
The rally in digital world stock prices began on Monday, the day Twitter accepted Musk's offer. On the same day, Trump said to foreign media that he would not return to Twitter, even if Musk had already entered Twitter.
Until then, there was speculation that Trump would return to Twitter after Musk bought it.
Trump has been ridiculed by the public before as "Twitter governs the country", and speaking on the Twitter platform is not only very frequent but also quite bold. But his account was banned on Jan. 6 for commenting on the Capitol attack, along with his Facebook, Instagram and Snapchat accounts.
That's why Trump started building Trust Social, but to his chagrin, he was so passive and sluggish on his app that he didn't say a word for 11 weeks.
This is also an important reason for speculation that he will eventually return to Twitter. If Musk is willing to unblock Trump's Twitter account, Trump will be able to regain 88 million followers at once, compared with Truth Social's total user base of only 365,000.
In an interview on Monday, though, Trump said he would join his channel on Trust Social over the next seven days as planned, adding: "We're taking in millions of people and we're finding that the response on Trust Social is much better than on Twitter... Twitter has bots and fake accounts, and we're doing all the hard work (to get better). ”
Can Truth Social break through
According to a statement from Digital World last year, its goal is to "ally with free media and fight back against 'big tech' companies in Silicon Valley," implying to fight back against companies like Twitter and Facebook.
Devin Nunes, the company's chief executive, also said when Truth Social topped the Apple Store free list, "Truth Social is becoming home to some of the best talent on the Internet."
Trump's traffic has indeed brought a lot of attention to the nascent company, and even has the potential to compete with Twitter, but in fact it is still not on the consideration list of many investors.
Discussion of Trust Social has been low on Wallstreetbets, a sub-section of the Reddit forum known for its GameStop airfare, and on StockTwits, which gathers a large number of investors. Even after the stock's unexpected rally on Wednesday, it still failed to generate discussion.
Individual investors have invested just $3.78 million in the digital world stock in the past two months, the data shows. But in the eight days when the stock was first listed and traded, the investment volume of individual investors reached $220 million.
Just last week, hedge fund Kerrisdale Capital Management also released a short report on the digital world, arguing that the SEC's regulation would hit the stock's stock price.
Even Musk has come to the bottom of the tunnel, saying that True Social can now exist only because Twitter is censoring speech and obstructing free speech. It also proposed changing the name of Truth Social to Trumpet, a satire on the platform's strong ties to Trump.
The biggest risk of this software born of Trump will also be Trump. Markets are predicting whether Trump will abandon his social app for the greater good. And once Trump leaves, the value of Truth Social will shrink wildly.
And this is also the reason why large investors and institutions remain cold, after all, it is a little difficult to guess the mind of quasi-Trump.