Traders Are Betting Millions That Trump Media Will Tumble – The New York Times
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The parent company of Truth Social is a popular target for short-sellers, even after they lost $100 million last month betting on a decline in the stock that didn’t come.
Before former President Donald J. Trump’s social media company made its stock market debut, many investors were lining up to bet on its collapse. After the company’s share price plunged following an initial surge, the appetite to bet against the stock has grown even more ravenous.
Trump Media & Technology Group, which trades under the ticker DJT, slipped on Wednesday to below $50 per share, extending a steep decline this week that pulled the stock down from its high near $80 and erased more than $2 billion of market value.
Trump Media is the most “shorted” special purpose acquisition vehicle in the country, according to the financial data company S3 Partners. Short-sellers bet that the price of a stock will fall. They do that by borrowing shares of a company and selling them into the market, hoping to buy them back later at a lower price, before returning the shares to the lender and pocketing the difference as profit.
The demand to short Trump Media, the parent company of the social media platform Truth Social, is so great that stock lenders can charge enormous fees, making it hard for short-sellers to turn a profit unless the shares fall significantly. Still, there is a lot of interest in taking the bet.
“They are looking for this stock to crater and crater very quickly,” said Ihor Dusaniwsky, managing director of predictive analytics at S3.
Before Trump Media got its stock market listing, it agreed to merge with a shell company, Digital World Acquisition Corporation, which went public in 2021. In the months before the merger, which closed last week, investors also bet heavily against Digital World as a proxy for Trump Media.
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