DJT has rebounded from a low in the $22 range on 16 April 2024 to the high-$40s as of the end of the month. How can this be for a stock currently valued over 1,000x?
Trump Media and Technology (DJT) is currently the most expensive stock on the Nasdaq, and it keeps getting more expensive. Why? It hit the $22 level on April 16, and closed April at the $49 mark. What is the impetus for the rise? The company’s filings show that it made $4 million in 2023, and there have been no corrections adding a zero to that number. So, what gives?
Recent SEC filings
While no amendments raising earnings 10x have been filed, David Nunes , the former U.S. Representative from California and current of CEO of Trump Media has been busy reaching out in defense of the stock.
First, Nunes reached out to Nasdaq CEO Adena Friedman on 19 April, claiming that naked short selling was being done with the DJT stock. He listed four companies that he claimed were responsible for 60% of the naked short selling, and he demanded that the exchange do something about it.
On the 23rd, Nunes asked House committees to identify the traders who were doing the short selling in the four companies that accounted for most of the naked short selling. He also asked the committees to investigate the companies for possible tax fraud.
However, the communication that might have done the most good for the DJT stock went not to the government or the exchange, but to the private individuals who own a lot of the float on the stock. That letter contained instructions on how to prevent shares from being used in a short, and also on how to get them back – with the warning that doing so might incur penalties for the lender of the shares. It is possible that enough of those who bought DJT as a political statement in support of Trump would follow those instructions and thus begin to tighten supply by doing precisely that.
Covering bets
There is another possibility, which is tied to all of the above. Even though four companies, namely Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital, are supposedly the culprits in the horrible short selling scheme, there are plenty of other short sellers at this time. If many of them have decided to make sure that their positions were covered, it could have started the stock’s climb.
Are short sellers creating a rise for the stock? Are new buyers coming into the market? Or is it a combination of the two? Regardless, it’s not about the fundamentals.
Argomenti
