Short sellers who bet against Donald Trump’s media company have lost as much as $420 million in the six weeks leading up to Tuesday’s blowout election victory.
S3 Partners, the financial analytics firm, released a report on Wednesday detailing how short sellers bet wrong as Trump Media and Technologies Group saw its shares surge by nearly 200% since late September.
Trump Media, the parent company of the president-elect’s social media platform Truth Social, rose by 35% between Tuesday evening and Wednesday morning as the vote tallies made it apparent that the 45th president would be returning to the White House for a second term.
The stock of President-elect Donald Trump’s media company has surged in recent weeks — costing short sellers hundreds of millions, according to a report. REUTERS
Shares of Trump Media were down in pre-market trading on Thursday. The stock had risen nearly 200% since late September.
The 78-year-old Trump soundly defeated his Democratic opponent, Vice President Kamala Harris — once again defying the odds and capping a political comeback that appeared inconceivable after his 2020 loss to Joe Biden.
But the stock fell by more than 18% by the close of trading on Wednesday. Shares of the company were down by more than 11% in pre-market activity on Thursday.
On Wednesday, the day Trump won the election, short sellers faced a loss of 14 million shares, at $5.50 per share, or $77 million, the report said.
With its heightened volatility, short interest, lack of earnings and loyal following of retail investors, DJT “checks the boxes as a meme stock,” S3 said.
S3 said the stock has become highly volatile and, due to reasons including significant interest by short sellers, a relatively small number of shares available for trading and substantial losses for short sellers, it is at risk of a “short squeeze.”
That refers to a stock’s rapid rise forcing short sellers to buy back shares to cover their positions, further driving up the stock price.
Trump trounced his opponent, Vice President Kamala Harris, in Tuesday’s election. REUTERS
Trump Media & Technology Group operates Truth Social, a social media site and streaming service. Trump himself is the company’s biggest shareholder.
The stock’s fervent following of Trump supporters vow the same never-sell mentality, sometimes referred to as “diamond hands,” as holders of cryptocurrencies.
On Tuesday night, hundreds of the stock’s fans gathered in an election-watch party on online video-sharing platform Rumble. There, they toggled between the stock’s share price, Trump’s odds on the election gambling site Polymarket and the election results.
The week before the election, trading of Trump Media shares was halted several times as the shares surged up and down in a chaotic frenzy.
Trump Media is parent company of Truth Social. Truth social
“With a crowded short position and increased volatility, DJT remains a unique post-election focus for market participants,” the report stated.
The company added that the stock should normalize closer to Trump’s inauguration in January.
The biggest beneficiary of the stock’s ascent has been the president-elect. Since March, Trump has seen his stake in the company rise as high as $5.2 billion, according to Reuters calculations.
On Wednesday it was worth $4.1 billion.
The stock, alongside online gambling sites like Polymarket and Kalshi, became something of a proxy for Trump’s reelection chances.
In all, Polymarket gamblers spent more than $3.7 billion placing bets on the presidential election.
An anonymous French bettor, who goes by Théo, pocketed a $48 million profit after wagering $30 million that Trump would win.
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