How to Short Trump? Trump's Net Worth Surges by $4.5 Billion, His Social Media Platform Debuts on NA

In the fervor of the 2024 presidential election, Trump not only continues to wave the flag of “Make America Great Again (MAGA)” but has also successfully expanded his business empire. After 29 months of meticulous preparation and negotiation, his social media platform, “Truth Social,” under the parent company Trump Media & Technology Group (TMTG), finalized its merger with Digital World Acquisition Corp (DWAC) and officially listed on the NASDAQ on March 26, Eastern Time, with the stock symbol DJT.

Shortly after debuting on NASDAQ, DJT’s stock price surged by 58%, at one point reaching $79.38. However, due to significant price fluctuations, DJT was briefly halted from trading and eventually closed with a 16.1% increase, followed by a 6.05% rise after hours. This performance highlighted the market’s attention and anticipation towards Trump Media & Technology Group. In the following days, DJT’s stock price continuously fell, closing at $40.59 on April 5, down 12.05% according to BiyaPay, a multi-asset trading wallet.

DJT’s Past and Present

Trump Media & Technology Group (TMTG) first announced its merger with DWAC in October 2021.

Subsequently, Trump launched “Truth Social” in February 2022. A year before its launch, in January 2021, Trump was banned from major social media platforms like Facebook and X following the Capitol riot. Although his accounts on these platforms were later reinstated, Trump persisted in using Truth Social as his main “information amplifier.” Due to several lawsuits, including federal investigations, the merger process was delayed until February 15 of this year, when it finally received approval from the U.S. Securities and Exchange Commission (SEC).

On the evening of the 14th Eastern Time, Trump suddenly posted on social media, stating: “‘Truth Social’ is my voice, and the real voice of America!!! Make America Great Again (MAGA) 2024!!” Following this, on the 15th, DWAC shareholders voted and approved the merger with TMTG. Trump’s path to going public through this merger was finally successful.

According to media reports, Trump will own 58% of the merged company, nearly 79 million shares. Based on DWAC’s closing price of $49.95 on the 25th, the value of his holdings reached $3.9 billion, bringing his total net worth to $6.4 billion, and placing him among the world’s 500 richest people on the Bloomberg Billionaires Index for the first time.

Why Did DJT Plummet?

Financially

TMTG’s performance over the last three quarters has been less than stellar, with total revenue under $3.5 million and losses amounting to $49 million. However, for many investors, these financial figures are not their main focus. As a social media platform personally created by the former U.S. President Trump, TMTG undoubtedly holds significant political significance and market potential. Trump’s personal stake of about 60% in TMTG has made its listing a crucial avenue for his wealth increase.

Analysts suggest that investors view their investment in TMTG more as a political statement than a purely financial one. To some extent, TMTG has become a “quasi-election betting tool,” with its stock price movements closely tied to Trump’s political fortunes. Additionally, if the board grants Trump the right to sell shares early, it could alleviate the financial pressure on this Republican presidential candidate, providing substantial support for his campaign.

According to data from the financial analytics firm S3 Partners, there is significant short interest in DJT stock, about 11% of the float. This bet on a price decline, rather than an increase, is above average but not uncommon. Typically, short interest in a publicly traded company remains between 3% and 4%, but in extreme cases, when traders strongly believe in a bleak outlook for a stock, short interest can rise to 40% or higher.

Fundamentally

First, analysts point out a disconnect between DJT’s stock price and its fundamentals. Typically, a company’s stock performance is closely related to its fundamental health, yet DJT’s price tripled this year, diverging from its fundamentals. The reason is that DJT stock became a popular bet among investors speculating on Trump’s potential re-election as U.S. President.

The company’s valuation has risen sharply, making short selling very expensive. According to brokerage data, short sellers face an annual financing cost of up to 500%. S3 Partners’ data shows that with over $100 million in substantial short interest, DJT stock has become one of the most expensive short targets in the U.S.

Secondly, analysts note that DJT significantly lags behind other industry companies in terms of revenue and active user numbers. Reddit Inc., which went public last month with a valuation close to DJT’s, had 267.5 million weekly active users last quarter and generated $804 million in revenue last year. Snap Inc., with a market value of $19 billion, had sales of $4.6 billion last year, despite a net loss of $1.3 billion and around 420 million daily active users in the first quarter.

Although DJT has approximately 9 million registered users, it has not disclosed active user numbers. DJT explained in its prospectus that the company’s operational philosophy differs from traditional social media enterprises; it does not focus on active user numbers or revenue per user, believing that excessive attention to these metrics might distract from strategic business development.

The Future of DJT Stock

There is ample evidence that some buyers are betting on a bubble, hoping to sell before it bursts. An investor posted on Reddit’s popular stock channel WallStreetBets, stating: “The stock will fall to $2.50 after the merger.” Another investor suggested that anyone holding the stock long-term is a “MAGA bagholder,” ultimately benefiting Trump. This sentiment reflects a general pessimism towards DJT stock.

Since the beginning of the year, investors shorting DWAC have faced significant losses. However, there are several compelling reasons to believe that Trump’s company might face difficulties, exposing shareholders to substantial risk.

Two major reasons for the bearish outlook on DJT stock:

The profitability of the Truth Social network app is questionable. Besides Trump’s personal appeal, the app has no significant advantages over competitors like X and Facebook and is currently operating at a loss.

Trump might sell off his shares to cash in. He owns about 60% of the company, and with the stock price surge, his share value has increased by over $1 billion. Trump is facing four criminal cases and two civil lawsuits, which might necessitate substantial legal funds. According to the merger agreement, Trump must wait six months before selling his shares, but the board, largely comprised of his allies, can waive this requirement. If Trump sells his shares, it would significantly pressure the stock price.

How to Short DJT Stock?

For investors looking to short DJT stock in the U.S., it is recommended to choose a professional broker like Charles Schwab, a globally recognized investment broker. Opening an account with Charles Schwab gives you a corresponding bank account, allowing you to deposit USDT into BiyaPay and then withdraw fiat currency to invest in U.S. stocks at Charles Schwab. Additionally, BiyaPay has been authorized by the U.S. Securities and Exchange Commission and has opened margin trading, enabling investors familiar and comfortable with digital currency to directly search for DJT on BiyaPay and opt for short selling.

Conclusion

It’s worth mentioning that Trump once ventured into the stock market but ended in failure. Trump Hotels and Casino Resorts, which went public in 1995 with the ticker symbol DJT, filed for bankruptcy protection in 2004 and delisted from the NYSE. The new company, TMTG, also uses the code DJT, seemingly hinting at a recurring fate.