Let’s hope Trump can turn this around.
This past week has been turbulent for Trump Media & Technology Group Corp, as the company witnessed a sharp 25 percent drop in its stock value, accompanied by a significant decrease in the cost associated with short selling.
Investors seem to be adopting a more cautious stance towards the company, which bears the initials of the former president, Donald J. Trump. Since finalizing its merger with Digital World Acquisition Corp in late March, the company’s stock has plummeted by over 38 percent.
In the midst of this market turmoil, DJT, as it’s known on the stock exchange, faced another blow as the fees for short selling its stock dropped from a staggering 790 percent last week to 124 percent on Friday, according to data from Interactive Brokers.
Previously, with the stock trading at $48.81, short sellers faced a daily cost of around $1 per share. However, with the reduced borrowing fee and the stock price now at $31.43, the expense has decreased to approximately 10 cents per share per day.
Short selling involves borrowing stocks that an investor predicts will decline in value, selling them at the current market price, and later repurchasing them at a lower price, pocketing the difference as profit.
The decrease in short selling costs signifies a shift in the market’s perception of risk associated with Trump Media, even as Donald Trump, the company’s largest shareholder, faces a series of legal challenges.
The declining value of the company, with billions of dollars in market capitalization lost, coupled with the reduced costs of short selling, compounds the challenges facing the already struggling stock.
Trump’s ownership stake, initially valued at approximately $5.5 billion, has now dwindled to $2.4 billion, and continues to decline, exacerbated by a post-merger lockup period preventing the sale of his shares for six months.
The tumult surrounding Trump Media mirrors the legal turbulence surrounding its primary shareholder. Trump is currently embroiled in a hush money trial related to payments made to adult film actress Stormy Daniels during the 2016 presidential campaign, facing allegations of concealing these payments.
Additionally, Trump faces charges related to the alleged illegal retention of classified documents at his Mar-a-Lago estate. These documents, allegedly taken from the White House, contain sensitive national security information, and their unauthorized retention constitutes a breach of federal law.
The outcome of these legal battles could have significant implications for Trump’s ability to manage his business interests, particularly if convictions are secured, a possibility that legal experts like former acting solicitor general Neal Katyal consider likely.
