Trump Media Provides Short-Selling Prevention Tips Following DJT Stock Price Decline

By Thea Felicity

Apr 18, 2024 11:21 AM EDT

US President Donald Trump speaks following a tour of the Smithsonian National Museum of African American History and Culture in Washington, DC, February 21, 2017.
(Photo : SAUL LOEB/AFP via Getty Images)

In response to a major decline in DJT share prices, Trump Media has taken steps to inform its shareholders about strategies to safeguard their stocks from being loaned to short sellers, per CNBC.

Since the company's public trading debut on Mar. 26, the share price of DJT has sharply fallen. It closed at $26.40 on Wednesday, Apr. 17, marking a 63% decrease from its opening price on Mar. 26. The stock experienced a steep decline of 20% last week, followed by drops of more than 18% on Monday and over 14% on Tuesday. 

With former President Donald Trump holding nearly 60% of the company's shares, the decline in share value has raised concerns about the company's future. 

These developments have prompted Trump Media to update its FAQ page with detailed instructions on how shareholders can prevent their stocks from being loaned to short sellers in the section "How do I prevent my shares from being loaned for a short interest position?"

Now, the updated FAQ includes comprehensive instructions and a form letter for shareholders to prevent their shares from being loaned out, reflecting the seriousness of the issue. 

It's worth noting that only about 5 million shares of DJT have been available for shorting out of more than 136 million company shares, and much of this amount was already locked up in short positions earlier this month. Despite these efforts, concerns remain about the potential impact of short selling on the company's stock value.

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What is Short Selling?

Short selling is a trading strategy where investors borrow shares of a stock, sell them at the current market price, and hope to buy them back later at a lower price. This strategy profits from a decline in the stock's price. 

For instance, if an investor believes that a particular stock is overvalued and its price will fall, they may choose to sell it short. They borrow the shares from a broker, sell them on the market, and then repurchase them when the price drops. The difference between the selling price and the buying price represents their profit. 

However, if the stock price rises, the short seller faces potential losses, as they must repurchase the shares at a higher price than they sold them for.

READ MORE: Donald Trump's Media Company Sues 2 Co-Founders, Seeking to Void Their Shares in Trump Media

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