The controversial Trump SPAC surged near record highs on Tuesday after former President Donald Trump’s social media app debuted atop Apple’s App Store — even as the launch was marked with a flurry of one-star ratings, technical-support complaints and a massive waiting list.
Digital World Acquisition Corporation, the blank-check firm bringing Trump’s media venture public, had soared 10% Tuesday to close at $92.90 a share. That’s just shy of the closing high of $94.20 set last October.
Shares of Digital World, a special purpose acquisition company (SPAC) backed by a Chinese firm with a checkered regulatory history, backed off a bit Wednesday, falling 5% to around $87.
Truth Social, backed by Trump Media and Technology Group (TMTG), went live on Apple’s App Store on Monday with a waiting list totaling around 150,000. As of Wednesday, the waiting list totaled more than 550,000. Truth Social was the most-downloaded app in the App Store on Monday and Tuesday, according to research firm Apptopia.
Matthew Kennedy, senior IPO market strategist at research firm Renaissance Capital, said the large waiting list suggests Truth Social needs to invest more in the app, including by hiring staff and building server space.
“They still have work to do on the product. There’s still some growing pains, to put it kindly,” Kennedy said. “It’s difficult work to build out a social media app.”
Based on Digital World’s closing price on Tuesday, Trump’s media company has an implied market valuation of $19.1 billion, according to Kennedy.
“I can’t think of any other examples of pre-revenue tech/media companies valued so high,” he said.
Overall, Truth Social is rated 4.1 out of 5 stars on the App Store. But with half a million accounts in limbo, many would-be users have dragged down the average with a flood of critical reviews.
“Useless app,” one reviewer wrote. “Couldn’t create a log in, couldn’t sign in, couldn’t do anything! …. Must be the Democrats.”
One reviewer complained of an unresponsive support team: “I understand the high demand for this platform. I truly want to be a part of it. But if this is how, after months of apparent preparation you treat your clients, well then this platform will be short lived.”
Another wrote: “It looks like my 12 year old is leading the development of this app.”
Despite the large number of vocal critics, the majority of the App Store reviews have been positive, with some five-star reviews urging people to be patient — “I’ll wait as long as it takes because I know I won’t be censored” — and others appearing to sarcastically mock the app. “Finally there is a place where I can conspire with other traitors to overthrow the government without people telling me what a horrible person I am,” wrote one five-star reviewer. “Trump 2024!!!”
Despite a series of red flags surrounding the Trump SPAC, Digital World’s shares have skyrocketed about 70% so far this year.
“I’ve stopped trying to make sense of meme-stock trading. Any positive news can create a huge run-up,” said Renaissance Capital’s Kennedy. “A company like this has a large base of investors who are not selling. They don’t really have an exit plan.”
Digital World has achieved a staggering market valuation even though the Trump media venture has no known revenue, a CEO with no business or tech experience and federal regulators are investigating the deal.
Legal experts have previously told CNN that securities regulators are likely to heavily scrutinize the deal, slowing it down or even derailing it altogether. Biden’s top cop on Wall Street, SEC Chairman Gary Gensler, is openly skeptical of SPACs.
However, the Trump SPAC has become a darling of retail traders in the stock market, driving its share price to new heights.
“You can argue that fundamentally, a lot has changed: The company previously did not have a product. Now they do. That is a shift,” said Kennedy. “But they still have a lot to prove.”
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