DJT shares close down more than 9% as Trump Media hot streak stalls

Trump
Media
shares
dropped
sharply
Wednesday,
closing
down
by
more
than
9.5%.

Trump
Media,
which
trades
under
the

DJT
ticker,
closed
at
$45.16
per
share,
a
loss
of
$4.77
per
share.

The
company,
which
owns
the

Truth
Social
app,
is
still
trading
well
below
the
more
than
$70
per
share
it
opened
at
in
its
public
trading
debut
on
March
26.

Trump
Media
in
a
regulatory
disclosure
Tuesday
confirmed
that
former
President

Donald
Trump
received
an

extra
36
million
shares
of
the
company
in
a
so-called
earnout
bonus.

Trump,
who
already
owned
more
than
78
million
shares,
received
the
windfall
because
the
share
price
remained
above
a
benchmark
of
$17.50
for
20
trading
days
over
the
month
since
the
stock
began
being
publicly
traded.

Trump’s
stake
in
Trump
Media
now
stands
at
65%
of
the
company’s
shares,
and
is
worth
$5.7
billion
at
a
share
price
of
$50.

The
former
president
is
barred
from
selling
those
shares
during
the
six
months
following
the
execution
of
Trump
Media’s
merger
with
the
shell
company

Digital
World
Acquisition
Corp.
in
late
March.

Trump
Media’s
share
price
surge
has
come
as
the
company’s
CEO,
former
Republican
congressman

Devin
Nunes,
has
complained
about
potential
market
manipulation
of
the
company’s
stock
by

short
sellers,
and
as
the
firm
has
encouraged
shareholders
to
take
steps
that
would
prevent
their
stock
from
being
loaned
for
short
selling
trades.

Ihor
Dusaniwsky,
managing
director
of
predictive
analytics
at
S3
Partners,
told
CNBC
that
short
interest
in
DJT
shares
is
more
than
$147
million,
with
3.55
million
shares
shorted.

Dusaniwsky
said
the
fees
charged
to
borrow
shares
for
short
sell
trades
are “rising
again
with
stock
borrow
fees
on
existing
shorts
nearing
300%
fee
and
rates
on
new
stock
borrows
to
support
new
short
sales
are
hitting
the
600%
fee
level.”

“This
means
that
existing
short
sellers
need
to
have
DJT’s
stock
price
decline
by
-$0.35
every
day
just
to
cover
their
short
financing
costs,”
he
wrote
in
an
email.

While
there
was
increased
short
selling
in
Trump
Media
since
the
beginning
of
the
year,
when
it
still
traded
under
the
DWAC
ticker,
since
the
middle
of
April,
there
has
been
an
increase
in
covering
of
short
positions
by
traders,
Dusaniwsky
said.

“For
the
year,
there
has
been
1.4
million
new
shares
shorted,
worth
$59
million,
a
66%
increase
in
total
shares
shorted,”
Dusaniwsky
wrote. “But
over
the
last
thirty
days
we’ve
seen
2.8
million
shares
of
short
covering,
worth
$97
million,
a
-40%
decline
in
total
shares
shorted.”

“DJT’s
early
April
price
drop
still
makes
it
a
profitable
month
for
DJT
short
sellers
with
a
+$79
million
month-to-date
mark-to-market
profits,
+43%
for
the
month,”
he
said. “But
since
mid-April,
DJT
shorts
are
down
-$80
million
in
mark-to-market
losses,
-62%.”

“These
losses,
coupled
with
the
sky-high
stock
borrow
costs
have
squeezed
some
shorts
out
of
their
positions,”
he
wrote. “Expect
more
short
covering
if
DJT’s
stock
price
stays
at
these
levels
or
higher
as
the
high
stock
borrow
financing
costs
keep
taking
a
bite
out
of
prospective
profits,
even
on
weekends.”