Trump Media & Technology Group, which is publicly traded under the ticker DJT, has experienced a turbulent period in the stock market recently. The stock value soared fourfold before suffering a dramatic 39% drop, reducing former President Donald Trump’s investment in the company by over $2.4 billion.
The company, which owns the Truth Social app, saw its stock fall by $5.35 or 13.4%, dropping to $34.68 during early afternoon trading on Thursday. This came after a 22% fall on Wednesday, despite the shares reaching an intraday peak of $54.68 on Tuesday following several weeks of market growth.
Due to its unpredictable nature, DJT has been compared to meme stocks – companies whose trade value is influenced more by social media trends than revenue growth or profitability, traditional measures preferred by investors. Despite Truth Social’s declining revenue and substantial losses, Trump Media’s shares saw a significant surge in October as the presidential race tightened and betting markets such as Polymarket predicted odds in Trump’s favor.
The trigger for the two-day sell-off remains unclear, but DJT shares have drawn the attention of speculators and short sellers who bet on the stock’s fall. S3 Partners, a research group, suggests that some of the October surge in DJT shares might be due to short sellers needing to cover their bets, a move that creates a short squeeze and can boost shares.
Trump Media Group’s (DJT) stock, closely linked to Trump’s election chances, faces a high squeeze risk due to limited float and elevated short interest, according to S3. Trump’s 57% stake in the company and current short losses heighten the squeeze potential.
Trump is the largest investor in Trump Media, owning approximately 115 million shares. At its highest point on Tuesday, his stake was worth nearly $6.3 billion. However, the two-day sell-off has reduced the value of his investment to around $3.8 billion.
These losses, however, are theoretical as Trump has promised not to sell his shares, even though he is now able to do so. Selling even a fraction of his stake could potentially lower the price by flooding the market with available shares.
Despite the recent fall, many DJT shareholders, primarily small investors who purchased shares to show their support for the former president, remain adamant in their support. They blame short sellers and the SEC for the decline, with some vowing to retaliate in the months ahead.
