Trump’s Political Comeback Boosts Associated Stocks

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Trump’s Success in Iowa and New Hampshire Drives Surge in Stock Values

Two stocks linked to former US President Donald Trump experienced significant gains following his success in the Iowa caucus and the New Hampshire primary. With Trump eyeing a potential return to the presidency, his rival Ron DeSantis dropping out of the primary race further fueled positive sentiment. Digital World Acquisition Corp (DWAC), a special purpose acquisition company (SPAC) associated with Trump’s media venture, and video-sharing platform Rumble both capitalized on the political developments.

DWAC’s Triumph and Stock Surge

DWAC, the SPAC designed to take Trump’s Media & Technology Group (TMTG) public, particularly its social media platform Truth Social, witnessed a remarkable surge in its share prices. The shares nearly tripled on a year-to-date basis, marking a 190% increase before the New Hampshire primary results. Following Trump’s success, DWAC’s shares skyrocketed to over $50 from less than $20 just days earlier. Despite a subsequent dip, the shares maintained a 120% increase in the past month.

Rumble Emerges as a Contender

Rumble, positioned as a YouTube alternative with less censorship and favored by Republican voters, gained popularity among investors. While Rumble’s shares had depreciated to $3.33, one-third of their mid-January value, the New Hampshire primary revitalized its market standing, propelling the value to $5.68. However, both DWAC and Rumble experienced partial retracements in the days following the primary.

Caution Amid Speculation and Legal Challenges

Amidst the stock market enthusiasm driven by Trump’s political resurgence, concerns have emerged regarding DWAC’s fundamentals. The stock’s surge has drawn comparisons to meme stocks like GameStop, raising questions about its long-term viability. Trump’s legal challenges, particularly related to the US Capitol riots in January 2021, remain an ongoing issue. His disqualification from the 2024 ballot in Colorado highlights the legal hurdles, although attempts in other states like New Hampshire, Minnesota, and Michigan have failed so far.

DWAC’s Fundamentals Under Scrutiny

The recent scrutiny of DWAC’s fundamentals suggests that the stock’s momentum may be driven more by hype than sound financial principles. Investors, caught up in the excitement surrounding Trump’s political comeback, might need to consider the long-term viability of their investments. Additionally, Trump’s legal battles pose a potential obstacle to his candidacy, with ongoing attempts to challenge disqualifications in various states.

Legal Battles and Supreme Court Appeal

Trump faces multiple legal challenges, including his involvement in the US Capitol riots. While disqualified in Colorado, the legal landscape varies across states. Trump’s legal team contests his personal responsibility for the riots, and an impending appeal to the US Supreme Court will likely determine his eligibility to run in individual states. The intersection of legal issues and stock market speculation adds complexity to the landscape surrounding Trump’s potential return to the political arena.

SOURCE: Ref Image from Forbes

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