This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
After giving up the entirety of their post-merger gains, Trump Media and Technology Group (NASDAQ: DJT) shares are currently in the limelight for their elevated short interest. Yet, in a somewhat unusual move, the company is now advising concerned investors on how to prevent their shares from being loaned out for short positions.
Trump Media and Technology Group shares have now experienced two distinct mass liquidation waves in their post-merger phase. The first such wave materialized when the company disclosed that its Truth Social platform raked in a paltry $4.131 million in revenue in the entire of 2023, incurring a net loss of over $58 million. Do note that Trump Media's merger with the SPAC Digital World has unlocked around $193 million in proceeds, which should be sufficient to alleviate any near-term liquidity concerns.
Shortly thereafter, Trump Media shares experienced a second selling wave when Truth Social's parent filed with the SEC for the issuance of 21.491 million shares upon the exercise of its warrants.
Given these dynamics, it is hardly a surprise that Trump Media and Technology Group had a short interest of 14.61 percent as of the 28th of March (note that official short interest data is only available with a hefty delay).
What's more, given the dearth of freely available shares for shorting, it is currently quite expensive to take a bearish position in the stock, as indicated by the high short borrow fee in the above snippet.
A frequently asked question by Trump Media investors
"How do I prevent my shares from being loaned for a short interest position?"$DJT pic.twitter.com/IcaFpeNIVG
— Julian Klymochko (@JulianKlymochko) April 17, 2024
This brings us to the crux of the matter. Trump Media and Technology Group has now published a comprehensive list of FAQs to address some of the most pressing concerns of its investors. Among other answers, the company has advised investors to contact their respective brokers to restrict their shares from being loaned out for short positions.
Incidentally, Trump Media and Technology Group closed out today on a positive note, constituting a departure from the bearish regime that reigned over the past few days. So, is the company's advice to suffocate shorts already having an impact? Well, we'll know for certain in the next few days if the stock's short borrow fee skyrockets.
