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Trump Media’s crusade against short-sellers has coincided with a 92% rally in its stock price.
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The company has issued messages to its shareholders about how to combat short-sellers.
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Trump Media stock has attracted a lot of short-sellers since it went public last month.
Trump Media and Technology Group has ratcheted up its campaign against short-sellers, and it appears to be boosting its stock price, essentially sparking a short-squeeze.
The parent company of Donald Trump’s Truth Social released a press release on Monday, explaining to its retail investor base how to recall shares from short-sellers.
“TMTG wants to clarify that if shares are currently on loan by brokerage firms to facilitate short selling, shareholders have the option of asking their broker to recall their shares,” the company said in the press release.
“After recalling their shares, long-term shareholders who believe in the Company’s future can then hold their DJT shares in a cash account, opt out of any securities lending programs, or move their shares to a Direct Registration account at the Company’s transfer agent,” the company said.
Shares of Trump Media soared 12% on Monday following the press release and surged an additional 9% on Tuesday.
The stock is up 92% since it posted a message on its website about how its retail investors could put pressure on short-sellers by preventing their shares from being loaned out for a short-interest position.
If retail investors follow through with instructing their brokerage to not loan their shares to short-sellers, it would lead to a surge in the interest rate charged to bearish investors who sell the stock short, as there are fewer shares available to make a bet against the company. That could put a squeeze on short-sellers if the stock doesn’t quickly trend lower.
Trump Media has attracted a lot of short-sellers since it went public last month, mostly due to the fact that it generated $58 million in losses on just $4 million in revenue last year. Given its valuation of more than $6 billion, most investors would argue that the stock is wildly overvalued.
According to recent short-interest data, nearly 6 million shares of Trump Media are sold short, or about 8% of the company’s share float.
Read the original article on Business Insider
Source: finance.yahoo.com