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This week, special counsel Jack Smith brought four charges against Donald Trump. The indictment against the former U.S. president alleges that he conspired to overturn the 2020 presidential election, severely undermining the electoral process.

For the first time in our nation’s history, we are preparing to put a former president on trial for attacking the free and fair election process. This also marks the third indictment against Trump.

At present, the future looks almost as uncertain for Trump as it does for Digital World Acquisition (NASDAQ:DWAC), the blank-check partner of Trump Media & Technology Group. Its close ties to Trump isn’t helping DWAC stock right now.

Since the indictment, Trump has used Truth Social to offer commentary on the proceedings. However, even as his posts draw attention, DWAC stock is still struggling. This response suggests that if warning bells are tolling for Trump, they may also be for his company.

What the Trump Indictment Means for DWAC Stock

As the country keenly watches for updates on the trial, investors are wondering just how DWAC stock will fare. Digital World and fellow Trump trade Rumble (NASDAQ:RUM) are down between 5%-7% over the past five trading days.

Wanting to understand what the Trump indictments would mean for DWAC stock, I spoke to several experts.

Dr. David Kass, a clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business, sees Trump’s third indictment posing a negative impact on DWAC stock. A former member of multiple government offices, including the Bureau of Economic Analysis, Kass is an expert on corporate finance and health economics. He shared with InvestorPlace that he believes multiple events may be pushing DWAC down. In his words:

“The indictment of former President Donald Trump with respect to the events of January 6, 2021 made the headlines and contributed to the 6% decline in DWAC on Wednesday. (The Nasdaq index declined by 2% on August 2.) Although the possibility of this indictment may have been discounted by the market, the news of the extent of the charges very likely contributed to DWAC’s negative performance.”

The second factor that Kass highlights is the recent resignation of  Marcum LLP, the accounting firm hired to audit Digital World. Bloomberg reports that the auditor has been dealing with regulatory problems of its own. While Kass notes that this news likely flew largely under the radar, he believes it could significantly impact DWAC stock as it puts the TMTG merger in even further jeopardy.

Harry Turner, founder of investing education platform The Sovereign Investor, also offered insights on DWAC and the Trump indictments. Turner, a former hedge fund manager, notes that DWAC stock should reflect the brand of Truth Social and ultimately, of Trump. “Anything that tarnishes this brand or scuppers the eventual merger of DWAC and Truth Social, should theoretically hurt share price — these indictments being an obvious candidate,” he told InvestorPlace.

Turner offered one caveat that, historically, DWAC has traded with meme stocks. With Trump’s first and second indictments, he says the share price rose as a result of meme-fueled volatility.

What Comes Next

Current data from Ape Wisdom shows that retail investor sentiment toward Digital World isn’t rising. In fact, overall upvotes have fallen 83% during the past 24 hours. This strongly implies that while interest in the Trump trial is heating up, interest in DWAC stock is not. The fact that both it and Rumble are down for the week strongly implies that this isn’t a good time to be betting on Trump-linked stocks.

When I take a macroeconomic look at DWAC, I see a stock that has been in a long, slow race to the bottom for far too long. Ultimately, this downward trajectory has led to an inevitable death sentence. Its journey began when Truth Social’s user base declined by more than 90% a few months after the app launched. When Elon Musk took over Twitter, it compromised the platform’s growth prospects even more. The stock has survived longer than I initially thought it would. But if Donald Trump is sent to prison, Truth Social will collapse and with it, any chance of a merger. The final bells for both companies are already starting to sound.

On the date of publication, Samuel O’Brient 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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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