Trump Media & Technology Group (NASDAQ: DJT) has escalated its fight against short sellers who bet against the social media Truth Social, named after former President Donald Trump.
Devin Nunes, CEO of Trump Media, has formally requested Nasdaq’s cooperation in investigating alleged market manipulation involving the company’s DJT stock.
Nunes seeks trading data from 13 financial firms and urges Nasdaq to ‘fulsomely cooperate with any congressional or other investigations into these firms.’
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Protecting DJT stock investors against short sellers
In his letter to Nasdaq CEO Adena Friedman, Nunes emphasized the importance of protecting the 620,000 shareholders, primarily retail investors.
He argued that a thorough investigation into the anomalies of DJT stock trading would shield these shareholders from potential market manipulations and illegal practices by Wall Street insiders.
In response, Nasdaq reiterated its commitment to liquidity, transparency, and market integrity. The exchange has long advocated for transparency in short selling and supported SEC rules against naked short selling.
Weak financials are to blame for bad DJT stock performance
The controversy has drawn reactions from targeted firms. Citadel Securities, founded by Republican megadonor Ken Griffin, dismissed Nunes’ claims, calling him a ‘loser’ for blaming the company’s losses on short selling.
Trump Media has accused some firms of illegal naked short sales, which involves selling DJT shares without borrowing them first.
Nunes’ allegations may also be a tactic to divert attention from Trump Media’s financial struggles. Finance scholar Jay Ritter pointed out the challenge of justifying an $8 billion market cap for a company with only $4 million in annual revenue.
The company’s market value heavily relies on Trump’s brand and his loyal followers despite reporting a first-quarter net loss of $327.6 million on less than $1 million in revenue.
Further losses for DJT stock after a renewed audit
Trump Media & Technology Group filed re-audited financial statements with the SEC on Monday, updating its registration statement from April 15. The re-audits covered December 2022 and 2023 financials.
Following this disclosure, DJT shares fell over 6% with losses extending into pre-market trading by 5.61%. The re-audited financials revealed a net loss of $58.2 million for the year ending December 31, 2023.
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