The price of Trump Media shares concluded the week’s trading with a nearly 20% decline.
DJT shares witnessed an initial drop exceeding 8% within the early trading hours on Friday, eventually making a slight recovery by the day’s end. The closing bell saw shares up by 18 cents, settling at $32.59, reflecting a modest increase of approximately 0.5%.
However, this closing figure remained significantly lower than the initial selling price of Trump Media shares upon the company’s debut on March 26.
Trump Media, the owner of the Truth Social app, experienced a substantial 47.4% decline in April alone, erasing billions from its market value.
Former President Donald Trump retains the largest stake in the company, holding close to 60% of its shares.
On Monday, Trump is scheduled to commence jury selection for his criminal trial in Manhattan Supreme Court, facing charges related to falsifying business records concerning a 2016 payment to porn star Stormy Daniels.
Trump Media commenced public trading on March 26 with an opening price of $70.90 per share, reaching a peak of nearly $80 on the same day. Throughout that session, the company’s market capitalization surpassed $9.5 billion.
However, by the close of trading on Friday, Trump Media’s market capitalization dwindled to $4.45 billion, marking a staggering $5 billion drop from its peak over two weeks prior.
Trump Media initiated public trading following its merger with Digital World Acquisition Corp., a shell company established to facilitate private firms’ transition to public markets.
Trump Media’s financials from last year reveal revenue of only $4.1 million, coupled with a staggering net loss of $58 million.
Given this performance alongside the notably high stock price, short sellers have shown significant interest, essentially placing bets on the anticipation of a decline in the company’s share value.
As of this week, the short interest in DJT stood at $208.7 million, with 5.44 million shares being shorted, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, a prominent financial data marketplace platform.
Borrowing shares for short-selling purposes proved challenging, with fewer than 100,000 shares of Trump Media available for borrowing.
Short sellers typically borrow shares to sell, anticipating a buyback at a lower price in the future to return them to the lender, thereby profiting from the price difference between the trades.
Trump Media boasts 136.7 million outstanding shares.
A week prior, traders interested in shorting Trump Media shares faced exorbitant financing costs of up to 900% annually, implying a need for a $30-per-share drop within a month to break even on their investment, as per Dusaniwsky.
However, financing costs for short trades in Trump Media have since plummeted sharply to 200%.
Trump Media emerged following the ban of former President Trump from the social media platform X, previously known as Twitter, in the aftermath of the January 6, 2021, Capitol riot instigated by a faction of his supporters.
Trump, anticipated to be the Republican presidential nominee, is an active user of Truth Social. He frequently utilizes the platform to address his four pending criminal cases and numerous civil lawsuits, some of which have led to judgments against him exceeding $500 million.
This week, Trump hosted a gathering at his Mar-a-Lago club in Palm Beach, Florida, to commemorate Trump Media’s establishment.
“I believe Truth has become immensely significant. It embodies strength and dedication,” Trump expressed to attendees, as reported by the RSBN news site.
He also highlighted the financial stability of the company, stating, “Let’s remember, we carry no debt, and we possess over $200 million in cash, a highly liquid asset.”
