DJT: Why Trump Media shares closed more than 12% higher

The
share
price
of


Trump
Media
closed
trading
Monday
more
than
12%
higher,
continuing
a
stunning
rise
that
began
in
mid-April.

The

DJT
ticker
ended
the
day
at
$46.69
per
share,
up
by
$5.15,
a
gain
of
12.4%.

Trump
Media
owns
the
Truth
Social
app
frequently
used
by
the
company’s

majority
shareholder,
former
President

Donald
Trump,
who
is
also
the
presumptive
Republican
presidential
nominee
this
year.

“TRUTH
SOCIAL
IS
THE
REAL
VOICE
OF
AMERICA!!!”
Trump
wrote
in
a
post
on
the
site
earlier
Monday.

The
company
began

public
trading
on
March
26
with
a
price
of
more
than
$70
per
share.
Over
the
next
several
weeks,
share
prices
cratered,
ending
up
with
a
low
closing
price
of
$22.80
on
April
16.

Since
then,
Trump
Media
shares
have
more
than
doubled
in
price,
adding
billions
of
dollars
to
both
the
company’s
market
capitalization
and
the
ex-president’s
stake.

The
gains
occurred
without
significant
news
about
the
company’s
bottom
line
improving.

But
Jay
Ritter,
a
business
professor
at
the
University
of
Florida,
said
that
the
recent
bump
in
Trump
Media’s
stock
price
might
be
the
short-term
result
of
recent
statements
and
regulatory
filings
by
the
company
targeting
short
sellers.

“In
the
last
week
or
so
the
company
has
informed
its
shareholders
how
to
make
it
difficult
to
loan
their
shares
to
short
sellers,
and
it
is
possible
that
the
number
of
shares
available
to
short
has
decreased,
increasing
the
[cost]
borrowing
rate
for
short
selling,”
said
Ritter,
who
is
an
expert
on
initial
public
offerings.

“And
it
is
possible
that
some
of
them
[short
sellers]
have
cut
back
on
that.”

Ritter
also
that “there
might
be
some”
short
squeeze
occurring,
in
which
short
sellers,
who
are
betting
that
the
share
price
will
drop,
are
forced
to
repurchase
Trump
Media
shares
to
replace
the
stock
they
borrowed
to
sell
short.
Such
repurchases
can
drive
the
price
of
shares,
which
in
turn
increases
pressure
on
short
sellers
to
buy
stock
to
cover
their
positions,
which
also
leads
to
price
bumps.

Earlier
Monday,
Trump
Media
issued
a

press
release
that
essentially
underscored
previously
released
information
to
shareholders
advising
them
on
how
to
avoid
having
their
stock
shares
loaned
out
for
use
by

short
sellers
to
bet
the
price
drops.

The
company
last
week
asked
Republican
committee
chairs
in
the
House
of
Representatives
to
investigate
what
it
claimed
was
potential
manipulation
of
Trump
Media’s
share
price
by
short
sellers.

Ritter
said
that
request,
which
has
yet
to
be
acted
upon,
also
could
be
helping
drive
up
the
share
price.

But
regardless
of
how
much
the
attack
on
short
sellers
is
affecting
the
price,
Ritter
said
that
Trump
Media
remains
a “meme
stock,”
whose
market
valuation
bears
little
if
any
relationship
to
its
underlying
business,
and
future
business
prospects.

Trump
Media
has
more
than
$200
million
in
cash,
but
its
social
media
business
last
year
booked
$58
million
in
losses
with
revenue
of
just
$4.1
million.

But
the
company
has
as
its
effective
face
Donald
Trump,
whose
political
supporters
are
among
the
small
shareholders
helping
to
bolster
the
stock
price.

“With
these
meme
stocks
it’s
really
difficult
to
predict
what’s
going
on
on
a
daily
or
weekly
basis,”
Ritter
said.

“Whether
we’re
dealing
with
a
price
of
$32
per
share
a
week
ago,
or
$46
now,
we’re
quibbling
about
whether
the
stock
is
overvalued
by
1,000%
or
2,000%,”
he
said.

Ritter
noted
that
Trump
Media’s
market
capitalization,
when
factoring
in
36
million
extra
shares
Trump
was
recently
granted
as
a
result
of
the
stock
price
staying
above
$17.50,
is
about
$8
billion.

“A
company
with
less
than
$5
million
of
annual
revenue
and
losing
lots
of
money
and
doesn’t
seem
to
have
business
plans
that
are
going
to
generate
a
lot
of
growth,”
Ritter
said. “The
company
might
be
worth
a
couple
of
hundred
million
dollars,
but
$8
billion
seems
like
on
the
order
of
2,000%”
of
what
it
should
be
worth
according
to
traditional
metrics,
he
said.

Ritter
expects
Trump
Media’s
share
price
to
eventually
plummet
to
the
low
single
digits.

When
meme
stocks “get
fantastically
overvalued,”
he
said, “it’s
easy
to
predict
with
a
high
degree
of
confidence
that
the
long-term
returns
are
going
to
be
pretty
bad.”

This
is
developing
news.
Check
back
for
updates.