The ‘short’ story behind Donald Trump's Truth Social platform


Shares of Trump Media & Technology Group — the former and possibly future president’s eponymous social-media company — have lost around half their value since going public last month. 

It’s easy to see why: Massive operating losses — and let’s face it, aside from Trump himself, just who really uses its Truth ­Social social-media product?

User traffic on the platform is just a small fraction of its major competitor X (formerly known as Twitter, whose owner Elon Musk continues to pull out his hair trying to figure out how to make his baby profitable nearly two years after taking it private). 

And yet with all the selling, Trump Media shares aren’t worth zero — far from it in fact (it closed Friday at $32.59, down from its high of $79.38).

So someone must be buying the stock that trades under the symbol “DJT,” which in case you don’t know, are the initials for the one-and-only, Donald J. Trump.

The question is, who is crazy enough to throw money at a business that reported big losses, is warning of potential insolvency, and offers investors a stock likely to fall a lot further? 

It’s a question I’ve been posing to my friends in the market-making business (people who match buyers and sellers of stock), and some random traders, and the answers aren’t that crazy if you understand how markets work, and how they’ve evolved in recent years.

Some of the buying is irrational, and some of it makes all the sense in the world if you work at a major trading desk and are willing to roll the dice to make a quick buck. 

Let’s start with the irrational.

The most natural buyers are the true believers — so-called meme investors who flooded the markets in recent years — and now see DJT (despite its suspect business model) as their next get-rich-quick scheme.

Meme investors are indeed an odd bunch.

They seem to think stock prices never go down and that tapping into a social-media “meme” — like a company backed by a celebrity ex-president who is fighting off multiple indictments yet remains ahead in the polls — will make them a fortune. 

Yes, we’ve seen this before.

Recall how a couple of years ago first-time investors flocked to shares of GameStop, trading under the symbol GME, and AMC Theatres, thinking they found gold in beaten-down shares of financially troubled companies.

Initially they made some money as they bid up share prices, though many were part of the HODL (Hold On for Dear Life) social-media investing craze who thought that via some magic, these companies would suddenly transform themselves into the next Apple or Amazon. 

Cold hard reality 

They didn’t of course.

GME hit some highs, and traders who shorted the stock (betting it would fall) initially got crushed, but soon enough, reality set in.

Same with AMC.

GME now is down more than 50% over the past year and AMC more than 90%.

And after factoring in its reverse split, its stock is worth just about 27 cents to long-time holders.

Shorts eventually made a fortune. 

The meme scenario is playing out once again in the trading of DJT, and that accounts for the other buyers of DJT: stock lenders. 

DJT is a perfect short for reasons outlined above. But the process of short selling involves borrowing shares for a fee, holding them, and hopefully making money by replacing the borrow when shares decline.

Yet to short something, you must find shares to borrow, aka someone to lend them to you.

After the initial meme rally, there was plenty of AMC and GME in circulation.

DJT shares are pretty scarce, I am told, because insiders like Trump can’t sell for six months thanks to lockups that kick in after a public offering.

The float is far less than half of DJT’s outstanding shares, so it costs a lot of money to borrow the stock. 

The financial-data firm S3 Partners says DJT is among the most expensive stocks to borrow in the market.

In other words, there’s some money to be made in lending the stock, and that accounts for the other set of DJT’s buyers in recent weeks, traders tell me. 

Of course, this is all tricky business; any trader who is lending stock owns it, so he needs to hedge by shorting other shares.

Even so, if prices of DJT decline significantly and the hedges don’t work out, that might cost him more money than what he’s earning from lending fees. 

But stock trading isn’t for the faint of heart.

There are lots of reasons why people buy something and, given the intricacies of the market, there are lots of ways they can earn a dollar from spending a dime. 

Iran and the Fed 

The latest inflation numbers might stop the Fed from cutting rates in June, though a bigger concern for those banking on the return of easy money might be what’s coming out of the Middle East. 

Wall Street traders told me late last week the word they were getting from government sources was that an Iranian response to Israel’s missile strike on Iran’s Syrian embassy was imminent. And Iranian drone attacks were underway as this column went to press. If the situation escalates,  watch oil prices soar, inflation spike —  and forget about rate cuts for the foreseeable future.

And Iranian drone attacks were underway as this column went to press. If the situation escalates, watch oil prices soar, inflation spike — and forget about rate cuts for the foreseeable future. 

Unrest and war, particularly in the Middle East, is never a good thing, but the volatility of this one could be immense given the economic stakes of higher oil prices.

Not only will the Fed’s rate-cut plans be shattered, the economy could take a nosedive, upending the 2024 presidential race. 

So stay tuned.



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