Trump Media & Technology Group, under the leadership of CEO Devin Nunes, has escalated its efforts to address suspected market manipulation targeting its stock. Nunes has formally reached out to the Nasdaq, urging the exchange to actively participate in investigating potential irregularities in the trading of Trump Media shares. In a letter addressed to Nasdaq CEO Adena Friedman, Nunes underscored the critical importance of safeguarding the interests of the company’s shareholders, a significant portion of whom are individual retail investors.
This appeal for cooperation follows Nunes’ earlier communication with Nasdaq in April, where he initially raised concerns regarding possible instances of market manipulation. Specifically, Trump Media has leveled accusations against certain financial entities, alleging their involvement in what’s known as naked short selling, a practice where stocks are sold without proper ownership or legitimate borrowing. Such actions, if substantiated, could potentially be deemed illegal and could significantly undermine shareholder confidence and the integrity of the market.
Short selling, a common investment strategy, typically involves borrowing shares and selling them with the anticipation of repurchasing them at a lower price in the future. However, Trump Media contends that some firms have engaged in naked short selling, exacerbating market volatility and adversely affecting the company’s stock performance.
Critics, including Jay Ritter, a prominent finance scholar at the University of Florida, suggest that Nunes’ focus on short selling may serve as a diversion from the underlying challenges confronting Trump Media. Despite the company’s ambitious objectives, such as the development and launch of the Truth Social app, it has encountered difficulties in generating substantial revenue and achieving profitability. This disconnect between market valuation and financial performance raises legitimate questions about the long-term viability of Trump Media’s business model.
Since its merger with Digital World Acquisition Corp. in March, Trump Media’s stock, trading under the ticker symbol DJT, has experienced considerable volatility. Despite attempts to stabilize its performance, the company continues to face heightened scrutiny from both investors and industry analysts alike.
With former President Donald Trump holding a controlling stake in the parent company of Truth Social, the stock’s trajectory is intricately linked to his personal brand and public perception. However, the overreliance on Trump’s popularity as a key driver of market sentiment may not be sufficient to sustain the company’s market valuation over the long haul, particularly without substantial revenue growth and profitability.
In summary, Trump Media’s proactive stance in seeking an investigation into alleged stock manipulation underscores its ongoing struggle to maintain investor confidence amid turbulent market conditions. As the company grapples with these challenges, it must address fundamental issues related to its business strategy and financial performance to ensure sustainable growth and lasting shareholder value.