Trump Media & Technology Group has fired another salvo in its war against short sellers betting on Donald Trump’s eponymous social media company.
Trump Media CEO Devin Nunes has asked the Nasdaq to cooperate in an investigation into alleged market manipulation of the company’s shares.
He is seeking trading information from thirteen financial companies and wants Nasdaq to “fully cooperate with any congressional or other investigations into these companies.”
“DJT shares are owned by more than 620,000 shareholders, the vast majority of whom are ordinary retail investors. A thorough investigation into the DJT stock trading anomalies would help protect these shareholders from market manipulation and defend them against potential illegal practices by Wall Street insiders,” Nunes wrote in a letter to Nasdaq CEO Adena Friedman.
Nunes first wrote to Friedman in April to warn the stock exchange about “potential market manipulation.” The Nasdaq could not immediately be reached for comment.
One of the companies targeted by Nunes, Citadel Securities – led by Republican megadonor Ken Griffin – called Nunes a “loser” for blaming Trump Media’s losses on short selling.
Short sellers don’t actually own the shares, but borrow them and then sell them, betting that the shares will fall so they can buy back the shares at a lower price and keep the difference.
Trump Media has accused financial companies of engaging in naked short sales, where they bet a stock will fall without borrowing or owning the stock. Such a practice may be illegal.
Historically, short selling has been a scapegoat for companies struggling under market pressure.
“Nunes may be trying to deflect attention from the fact that Trump Media management is struggling in its attempt to grow its revenues and become profitable,” said Jay Ritter, a financial scientist at the University of Florida. “Whether or not there is naked short selling, it is difficult to justify an $8 billion market cap for a struggling company with $4 million in annual revenue.”
Trump owns 65% of the shares in the parent company of the Truth Social app. The stock trades under the vanity DJT ticker.
Volatility has been the stock’s guiding principle since it began trading following its merger with shell company Digital World Acquisition Corp. in March. The stock has soared from a high of $79.38 per share at the end of March 26 to a low of $22.84 on April 16. On Wednesday, the stock closed 3% higher at $46.75.
Trump Media’s $8 billion market cap rests almost entirely on the Trump brand and his loyal following, including retail investors who have shown their support for him by backing the stock.
Trump Media reported a first-quarter net loss of $327.6 million on revenue of less than $1 million.
This article originally appeared on USA TODAY: Trump Media wants investigation into alleged ‘naked’ short selling
