Get ready for a deep dive into the world of short selling and Trump Media’s valiant efforts to protect its shareholders from it.
Short Selling: A Risky Gambit
Short selling is a high-stakes game where investors borrow shares of a company, hoping to sell them for a profit when the price drops. It’s risky, as the downside is potentially infinite if the stock price keeps rising.
Trump Media’s Defense Strategy
Trump Media is not taking any chances. It’s offering a detailed roadmap for shareholders to prevent their shares from being loaned for short selling, a strategy they believe is vital for the company’s future.
The Short Seller’s Interest
Despite the high fees involved, short sellers have expressed keen interest in Trump Media. This underscores the belief that the company’s stock, DJT, has room to fall.
DJT’s Recent Performance
DJT has had a rocky start since its public debut in late March, plummeting over 60% below its opening price.
Trump Media’s Shareholder Protections
Trump Media has outlined several steps for shareholders to protect their shares:
- Holding shares in a cash account vs. a margin account
- Opting out of securities lending programs
- Moving shares to Trump Media’s designated transfer agent
- Transferring shares to a bank or retirement account
- Submitting a form letter to brokers with explicit instructions
Brokers’ Perspective
Loaning shares for short selling provides brokers with additional revenue, but Trump Media warns that brokerage firms stand to profit if share prices fall, while retail investors suffer losses.
Limited Shorting Opportunities
Despite short sellers’ interest, only about 5 million DJT shares are currently available for shorting, and much of this has already been taken up.
Expert Opinion
“If more stock becomes available, shorts are taking it down,” says Ihor Dusaniwsky of S3 Partners, indicating that short sellers are eager to borrow more DJT shares if the opportunity arises.
Trump Media’s Determination
Trump Media remains steadfast in its commitment to protecting its shareholders from short selling, providing a comprehensive arsenal of tools to safeguard their investments.
Data sourced from: cnbc.com
