Pedestrians were seen walking past the Nasdaq building on Tuesday, March 26, 2024, in New York. Trump Media, the company that operates the social media platform Truth Social, has replaced Digital World on the Nasdaq stock exchange.
Trump Media, the parent company of Truth Social, communicated with Nasdaq Inc. on Thursday regarding potential illegal activity that may be causing a decrease in the company’s share price. In a letter to the exchange, CEO Devin Nunes of Trump Media outlined concerns about what he suspects to be “naked” short selling.
“Naked” short selling involves the sale of shares without actually owning or borrowing them, followed by an attempt to buy shares at a lower price in order to cover the sale. This practice is typically illegal, unlike legitimate short selling where shares are borrowed before being sold.
The letter from Nunes was publicly disclosed in a filing with the Securities and Exchange Commission. He mentioned that the company’s shares were included on Nasdaq’s list of indicators of unlawful trading activity.
Nunes expressed concern that this type of short selling often benefits sophisticated market participants at the expense of retail investors. Representatives from Nasdaq and Trump Media did not provide immediate comments on the matter.
Following its merger with a blank-check acquisition company on March 26, Trump Media, majority-owned by former President Donald Trump, experienced a drastic drop in share value, down by approximately 50%. The company, though still valued in the billions, faces financial challenges and a lack of profitability.
Investors have been cautioned about trading Trump Media shares due to the company’s weak financial performance in 2023, with a loss of $58 million and minimal revenue. Despite these challenges, the company saw a slight increase in share value after the public disclosure of the letter to Nasdaq.
This story continues to develop, with updates and additional context expected in the future.