On March 26, 2024, pedestrians strolled past the Nasdaq building in New York. The structure was previously owned by Digital World but is now under the control of Trump Media, the parent company of Truth Social, a social media platform. Trump Media made its debut on the Nasdaq stock exchange that day.
Trump Media has raised concerns about illegal activity causing a decrease in the value of its shares and informed Nasdaq Inc. CEO Devin Nunes sent a letter to the exchange accusing them of “naked” short selling. This involves selling shares without owning or borrowing them, which is generally considered illegal. It is different from legitimate short selling where shares are borrowed before being sold to profit from share price declines.
In addition to this allegation, Nunes also mentioned in his letter to the Securities and Exchange Commission that Trump Media’s shares were on Nasdaq’s list indicating unlawful trading activity. The company’s majority owner is former President Donald Trump and it has experienced a decline in stock value following its merger with a blank-check acquisition company for public listing purposes. Its stock price dropped by about 50% from its all-time high on March 26th despite being worth billions of dollars.
Trump Media faces financial difficulties and requires cash inflows to stay afloat. Investors have been advised to be cautious when trading this stock due to the lack of fundamentals backing its high valuation. In 2023, Trump Media reported a loss of $58 million and revenue of just $4.1 million.
Following the release of Nunes’ letter, there was an increase in Trump Media’s share price on Friday but both Nasdaq and the company have yet to respond publicly regarding this issue. As new information becomes available, this story will continue to evolve with new context emerging