Life

Trump Media scrambles to stop short sellers from tanking share prices



Trump Media and Technology Group, the parent company of Truth Social, is scrambling to stop short sellers from tanking its share values.

NBC News reports that Trump Media this week sent around suggestions to shareholders to prevent their shares in the company from winding up in the hands of short sellers who are essentially betting on the company's failure to make money.

According to NBC, the "tips include holding DJT shares in a cash account at a brokerage firm as opposed to a margin account, 'opting out of any securities lending program,' moving Trump Media shares to the company’s designated transfer agent, and transferring shares to a bank and 'holding them in your retirement account.'"

Short sellers essentially pay brokerage firms fees to borrow shares on a temporary basis on the belief that the shares will sink in price.

READ MORE: From 'really rich' to begging: Inside Trump's U-turn on one of his first campaign lies

After borrowing the shares, the short sellers proceed to sell them on the open market and then by them back by a specific date when they have to be returned to their owners.

If the share price in that time has indeed gone down, then the short sellers pocket the difference they made between the original sale and the repurchase.

If the share price increases, however, the short sellers lose money because they'll be buying back the shares at a higher price than the original sale.

Short sellers have swarmed to Trump Media shares for weeks now, as its price has plummeted from a high of $66.22 on March 27th to a low of $22.84 on Tuesday, although its price has recovered some of that lost value in the last day-and-a-half of trading.

The longer-term threat to Trump Media's value likely isn't short sellers, however, but simply a lack of profitability. The selloff in shares started earlier this month when the company released an earnings report showing that it lost $58 million in the last fiscal year while generating just $4 million in revenues.

Buffalo
broken clouds
45.4 ° F
49 °
43 °
89 %
2.6mph
75 %
Fri
54 °
Sat
48 °
Sun
47 °
Mon
51 °
Tue
55 °

The Flooding Will Come ‘No Matter What’

This post first appeared at ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter...

Trump Becomes Just Another New York Criminal Defendant During First Day In Court

NEW YORK—As Donald Trump’s criminal trial in Manhattan debuts on Monday, let me share with you how we at TPM...

DeSantis signs bill banning outdoor worker heat protection laws

Related video: Governor Ron DeSantis signs new bills aimed...

OJ, Dead at 76—Some Thoughts on the Man, the Fantasy and the Universal Text

OJ Simpson’s death today at 76 seems and by all rights should be a smallish blip on the news horizon....