May 24, 2024

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Trump Media stock jumps for second day as company goes to battle with short sellers

3 min read

Trump Media & Technology Group stock (DJT) jumped over 25% Thursday as the company tried to fend off short sellers amid a volatile trading week.

According to an updated FAQ page on the Trump Media website, which is also included in a new securities filing posted Wednesday, the company is advising investors on ways to prevent their shares from being loaned for a short-interest position.

Short interest in DJT stock — bets that the stock price will fall rather than rise — is about 13% of outstanding shares, according to the latest data from S3 Partners. That’s up from roughly 11% at the time of its public market debut. The average short interest in public companies sits in the 3% to 4% range.

Trump Media went public on the Nasdaq after merging with special purpose acquisition company Digital World Acquisition Corp. in a deal approved by shareholders late last month. Shares are down about 55% since the end of March.

“To prevent shares from being loaned for a short interest position, contact your brokerage to place restrictions on the lending of your shares to short sellers,” the company said in its filing.

Trump Media provided a sample letter for investors to send to their brokers and advised “opting out of any securities lending programs.” The company also advised investors to hold their DJT shares in a cash account at a brokerage firm instead of a margin account and to transfer shares to a bank in order to hold them in a retirement account.

The short-selling prevention advice comes as shares tumbled earlier in the week. On Monday, the company filed to issue more than 21 million shares. One day later, it announced a new live TV streaming platform.

Trump maintains a roughly 60% stake in Truth Social. At current levels of roughly $30 a share, Trump Media boasts a market cap of roughly $4 billion, giving the former president a stake worth around $2.4 billion. Right after the company’s public debut, Trump’s stake was worth just over $4.5 billion.

NEW YORK, NEW YORK - APRIL 18: Former U.S. President Donald Trump arrives for his criminal trial as jury selection continues at Manhattan Criminal Court on April 18, 2024 in New York City. Trump was charged with 34 counts of falsifying business records last year, which prosecutors say was an effort to hide a potential sex scandal, both before and after the 2016 presidential election. Trump is first former U.S. president to face trial on criminal charges. (Photo by Jabin Botsford-Pool/Getty Images)NEW YORK, NEW YORK - APRIL 18: Former U.S. President Donald Trump arrives for his criminal trial as jury selection continues at Manhattan Criminal Court on April 18, 2024 in New York City. Trump was charged with 34 counts of falsifying business records last year, which prosecutors say was an effort to hide a potential sex scandal, both before and after the 2016 presidential election. Trump is first former U.S. president to face trial on criminal charges. (Photo by Jabin Botsford-Pool/Getty Images)

Former US President Donald Trump arrives for his criminal trial as jury selection continues at Manhattan Criminal Court on April 18, 2024, in New York City. (Photo by Jabin Botsford-Pool/Getty Images) (Pool via Getty Images)

The former president founded Truth Social after he was kicked off major social media apps like Facebook (META) and Twitter, the platform now known as X, following the Jan. 6 Capitol riots in 2021. Trump has since been reinstated on those platforms.

According to an updated regulatory filing released earlier this month, Trump Media reported sales of just over $4 million as net losses reached nearly $60 million for the full year ending Dec. 31. The company warned it expects losses to continue amid greater profitability challenges.

The filing also confirmed stakeholders are still subject to a six-month lockup period before selling or transferring shares. The only exception to the lockup period would be if the company’s board votes to make a special dispensation. Although possible, experts told Yahoo Finance last month the attempt would likely result in multiple lawsuits on behalf of public shareholders.

Trump faces a $454 million fraud penalty and a campaign fundraising shortfall ahead of his 2024 election rematch against Biden.

Trump recently posted a $175 million bond in the fraud case, which puts the final payment on hold while he appeals the verdict.

He is also on criminal trial related to alleged payments to adult film star Stormy Daniels.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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