Despite being the most heavily shorted SPAC in the U.S., Trump Media & Technology Group (DJT), behind the Truth Social platform, has seen its stock surge.
Trump Media & Technology Group (NASDAQ: DJT), the company behind former President Donald Trump’s Truth Social platform, has garnered significant attention from investors since its merger with Digital World Acquisition Corp (DWAC).
The merged entity began trading on the Nasdaq, experiencing substantial volatility, with its stock price surging over 230% within the year. Despite DJT being essentially a loss-making venture in a highly competitive industry, this remarkable performance suggests strong investor interest or speculative trading driven by the company’s high-profile founder.
DJT/DWAC the Most Heavily Shorted SPAC in the US
Despite the enthusiasm surrounding DJT, the company has become the most heavily shorted SPAC in the United States. With a short interest of $168.6 million, 3.37 million shares shorted, and 11.69% of its float sold short, the company faces significant pressure from investors betting against its success.
However, shorting the firm has proven challenging due to the high borrowing costs and limited availability of shares to short.
The stock borrow rates for DJT/DWAC are among the highest in the country, with fees exceeding 150%. This is partly because mutual funds and ETF providers, which typically serve as significant sources of stock for borrowing, do not usually hold SPACs in significant quantities.
As a result, the supply of DJT/DWAC shares available for shorting is limited, making it difficult for short sellers to execute their strategies.
Consequently, short sellers have experienced substantial losses, with year-to-date mark-to-market losses amounting to $158 million.
This indicates a challenging environment for those betting against DJT/DWAC, as the limited supply of shares and high borrowing costs have contributed to their difficulties. Despite the company’s financial struggles and the competitive nature of its industry, the strong investor interest and speculative trading surrounding DJT/DWAC have made it a formidable target for short sellers.
Is DJT a Meme Stock? Can it Herald the “Mother of All Short Squeezes”?
The trading activity surrounding DJT/DWAC has led many to consider it the latest addition to the growing list of meme stocks.
The company’s stock has exhibited behavior reminiscent of other meme stocks, such as GameStop (NYSE: GME) and AMC (NYSE: AMC), with rapid price increases and a solid following among retail investors.
The unique combination of speculative trading, high-profile backing from former President Donald Trump, and intense social media activity has contributed to DJT/DWAC’s status as a meme stock.
Discussions on social media platforms have revealed a coordinated effort by some investors to cause a “Mother of All Short Squeezes” (MOASS) in DJT/DWAC. These investors aim to drive up the stock price and challenge short sellers, similar to the strategies employed by retail investors in the cases of GME and AMC.
The comparison to these other meme stocks, where retail investors banded together to influence stock prices, further solidifies DJT/DWAC’s position in this category, highlighting the power of social media and collective action in shaping market dynamics.
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Originally Posted March 27, 2024 – Trump Media & Technology Group (DJT) Faces $168.6 M in Short Interest, Refuses to Back Down
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