Trump Media & Technology Group, the owner of Truth Social, is asking Congress to investigate potential illegal activity driving down its share price. Devin Nunes, the CEO of Trump Media, wrote a letter to GOP Chairmen of several House committees detailing the company’s concerns about possible manipulation of its stock price. Nunes highlighted the high cost of borrowing Trump Media shares to short, or bet against, the stock, suggesting signs of “naked” short selling.
Some experts, however, are skeptical of Trump Media’s claims of market manipulation. Jonathan Macey, a professor at Yale Law School, expressed doubts about the evidence supporting the allegations. Jay Ritter, a finance professor at the University of Florida, suggested that short sellers may be targeting Trump Media due to the stock being overvalued. Trump Media recently reported significant losses and has a price-to-sales ratio that is unusually high compared to similar social media companies.
Trump Media’s share price has declined by more than half since peaking in late March. The company pointed out that four market participants were responsible for a significant portion of the trading volume in their stock: Citadel Securities, Virtu Americas, G1 Execution Services, and Jane Street Capital. However, Ritter noted that Citadel and Jane Street are prominent market makers in many stocks traded in America, making their involvement common.
Nunes also sent a letter to Nasdaq, where Trump Media shares are traded, raising concerns about market manipulation and mentioning Citadel, founded by Republican donor Ken Griffin. In response, Citadel criticized Nunes for blaming their activity for Trump Media’s falling stock price, calling him a “loser.” The Citadel spokesperson stated that if Nunes worked for them, they would fire him. The company did not respond to the new letter from Trump Media.
Despite Trump Media’s allegations of market manipulation, experts believe that the stock’s decline may be due to its overvaluation and poor financial performance. The company’s losses in 2023 and high price-to-sales ratio suggest that investors may be shorting the stock based on these factors. It remains to be seen whether Congress will launch an investigation into Trump Media’s claims and what impact that may have on the company’s share price and future operations.
