Trump Media’s Naked Short Selling Allegations: What Investors Need to Know

On Tuesday, March 26, 2024, pedestrians passed by the Nasdaq building in New York. The building was previously owned by Digital World but is now under the control of Trump Media, the parent company of Truth Social. Trump Media made its debut on the Nasdaq stock exchange on that day.

However, things took a turn when the company suspected illegal activity that led to a decrease in the price of its shares. CEO Devin Nunes sent a letter to Nasdaq Inc., outlining what he believed to be “naked” short selling. This involves selling shares without owning or borrowing them, which is generally considered illegal. This is different from legitimate short selling where shares are borrowed before selling to benefit from share value declines.

In his letter to the Securities and Exchange Commission (SEC), Nunes also mentioned that Trump Media’s shares were on a list indicating unlawful trading activity. The company, majority-owned by former President Donald Trump, had seen its shares drop by about 50% from its all-time high on March 26 following a merger with a blank-check acquisition company to go public.

Despite being worth billions of dollars, Trump Media is facing financial struggles and needs cash. Experts advise investors to be cautious when trading the 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 the letter, shares of the company saw a slight increase on Friday. However, both Nasdaq and Trump Media have yet to respond to requests for comment on the issue. This story continues to evolve with new developments and context emerging as more information becomes available.

It remains unclear what impact this alleged illegal activity will have on Trump Media’s future prospects and whether it will affect other social media platforms such as Twitter and Facebook.

The allegations against Truth Social could lead to legal action against individuals involved in such activities or even shut down their operations entirely if proven guilty.

As always, investors should do their due diligence before investing in any stock or platform and should seek professional advice before making any decisions related to their investments.

Overall, this incident highlights once again how important it is for companies operating in highly regulated industries like finance and technology to adhere strictly to all laws and regulations governing their operations in order to maintain trust among customers and stakeholders alike.