In the battle against short sellers, Donald Trump is winning for now.
The former president’s social-media company, Trump Media & Technology Group Corp. DJT, -1.54%, has battled its way back on the stock market after blaming its earlier share price woes on naked short selling.
Since the company behind conservative social-media platform Truth Social declared war against short sellers in mid-April, its stock price has more than doubled, from a low of $ 22.84 to its last closing price of $ 47.93.
The price moves have seen Trump’s personal stake in the company rise and fall by billions. Its recent increase, however, ensured that Trump received an additional earnout of shares worth $ 1.8 billion. That payoff would have come only if the stock had stayed above $ 17.50 for 20 of the company’s first 30 days of trading.
As of its last close, Trump’s stake in the company was worth about $ 5.5 billion.
Whether the company’s earlier stock swoon — it had fallen almost 66% by mid-April from its peak of $ 66 in its first days of trading following a late-March launch — is actually the result of short selling is unclear. The company has also reported paltry earnings, large losses and little signs of impending growth in its business fundamentals.
But for the past three weeks, the company’s chief executive, Devin Nunes, has gone on the offensive, issuing rapid-fire statements telling shareholders how to lock up their shares to prevent them from being lent to short-sellers and pressing members of Congress to investigate.
Nunes has specifically accused market participants of engaging in “naked short selling.” Unlike traditional short selling, where traders bet on an expected price decline by first borrowing shares and then selling them, naked short selling involves selling shares without having first borrowed them. The practice is considered highly manipulative and was essentially outlawed following the 2008 economic crisis.
Blaming naked short selling for a stock dive has a long history for companies feeling the squeeze. Most famously, former Overstock Chief Executive Patrick Byrne, a longtime Trump supporter who was ousted after disclosing an affair with a woman who was a Russian spy, claimed in 2005 that a cabal of naked short sellers led by a “sith lord” were conspiring to sink the company’s stock price.
For his part, Nunes has pointed the finger at four firms: Citadel Securities, VIRTU Financial VIRT, +2.13%, G1 Execution Services and Jane Street Capital, accusing them of having been involved in over 60% of the trading volume in Trump Media shares.
That triggered sharp words from billionaire investor and Republican mega-donor Ken Griffin’s Citadel, which responded by dismissing Nunes as a “loser.”
“Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price,” the firm’s spokesman said in response. “Nunes is exactly the type of person Donald Trump would have fired on ‘The Apprentice.’ If he worked for Citadel Securities, we would fire him, as ability and integrity are at the center of everything we do.”
Nunes fired back, calling Citadel’s comment an “unhinged attack.”
‘Citadel Securities, a corporate behemoth that has been fined and censured for an incredibly wide range of offenses including issues related to naked short selling, and is world famous for screwing over everyday retail investors at the behest of other corporations, is the last company on earth that should lecture anyone on ‘integrity,’” he said in a post on Truth Social.
Representatives for Virtu, G1 and Janes Street didn’t respond to messages seeking comment.