Source: Finance Association
① On Wednesday, Trump Media's official website updated frequently asked questions and answers to include “How to prevent your shares from being loaned to short sellers”; ② Since the beginning of the month, Trump Media's stock price has plummeted all the way, from a high of $79 to around $22, which profoundly reflects the volatility of the stock; ③ Trump Media's move also highlights the threat of short selling risks to its stock price.
$Trump Media & Technology (DJT.US)$The stock has plummeted since the beginning of the month, and has now fallen below the issue price. The sharp contraction in stock prices not only caused heavy losses to some investors, but also severely damaged Trump's own assets.
On Wednesday, Trump Media's official website updated a short selling prevention reminder to specifically guide shareholders on how to prevent their shares from being loaned to short sellers for trading.
Kevin Murphy, a business professor at the University of Southern California, said that the move did show that the company and shareholders were concerned about shorting Trump's media shares. However, he also pointed out that managers who generally believe that stocks are undervalued will not worry too much about short sellers.
In other words, companies that think their stock value is too low but are confident in their strength are too lazy to take care of short sellers' momentary speculation. Murphy admits that this is also the first time he has seen a company instructing shareholders how to prevent their shares from being loaned to short sellers.
The stock price of Trump Media (DJT) rose sharply by more than 25% on Thursday, but the stock price was still lower than the official opening price of $70.90 on March 26. The closing price on Thursday was only $33.19.
How to stop short selling
Trump Media stated on its official website that brokerage firms promote short selling and earn revenue by lending DJT shares held in shareholders' margin accounts. Stock declines are profitable for short sellers and brokerage firms, but not good for DJT shareholders.
The proposal is that shareholders can save their DJT shares in the brokerage company's cash account, or opt out of all securities lending plans, or transfer shares to DJT's transfer agent Odyssey Transfer and Trust Company, or transfer them to banks and keep them in retirement accounts to avoid short selling.
Trump's media also carefully prepared the notice materials required by shareholders, from format to wording, to teach investors how to write letters to brokerage firms to prevent their shares from being loaned to short sellers.
In addition to sniping at empty heads, the Trump media's move had another deep meaning.
According to the profit clause in the company's listing and merger transaction, if DJT's stock price remains above $17 per share in the next few days, majority shareholder Trump will receive rewards from the company, and his 78.75 million shares will increase by 36 million shares. Based on the closing price of US stocks on Thursday, this is equivalent to Trump increasing his wealth by about 1.2 billion US dollars.
editor/tolk