Trump Media Short Sellers Lose A Whopping $420M

November 7, 2024

Trump Media short sellers lose a whopping $420m according to fresh data from S3 Partners, after a historic comeback and victory.

According to a report from financial analytics firm S3 Partners, investors who have bet against Trump Media & Technology Group (DJT) have lost a whopping $420 million since the stock began reflecting Donald Trump’s election odds.

Following a decisive victory over Democratic candidate Kamala Harris, Trump, 78, has reclaimed the White House.

In the six weeks leading up to his win, shares of Trump Media surged by an exciting 196%.

The stock, along with online gambling platforms like Polymarket and Kalshi, has become a proxy for Trump’s chances of reelection.

S3 Partners noted that DJT exhibits characteristics of a “meme stock” due to its volatility, significant short interest, lack of earnings, and a dedicated base of retail investors.

Trump Media & Technology Group operates Truth Social, a social media and streaming platform, with Trump himself as the largest shareholder.

The stock enjoys a passionate following among Trump supporters, who often demonstrate a “diamond hands” mentality, similar to that seen in the cryptocurrency and retail investor communities.

On election night, hundreds of fans of the stock gathered for a watch party on the video-sharing platform Rumble, where they monitored the stock price, Trump’s odds on Polymarket, and the election results simultaneously.

In the week leading up to the election, trading in Trump Media shares was frequently halted due to wild fluctuations.

According to S3, the stock’s high volatility, coupled with significant short-selling interest and a limited number of shares available for trading, puts it at risk for a “short squeeze.”

This situation occurs when a stock’s price rises quickly, forcing short sellers to buy back shares to cover their positions, which can further escalate the stock price.

On the day of Trump’s election win, short sellers faced losses of 14 million shares at $5.50 each, totaling an outstanding $77 million.

The report emphasized that with such crowded short positions and increased volatility, DJT remains a focal point for market participants in the post-election landscape.

It also suggested that the stock price is likely to stabilize as Trump approaches his inauguration in January.

The biggest beneficiary of this stock surge has been Trump himself.

Since March, his stake in the company has reached as high as $5.2 billion, with its value on Wednesday estimated at $4.1 billion, according to calculations by Reuters.

Trump’s company has alleged that Ken Griffin’s Citadel Securities has been behind ‘naked short selling’ practices to drive share prices down illegally.

DJT stock is currently trading at $35.96 at the time of this writing.

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