Trump Media & Technology Group Seeks Congressional Probe into Alleged Market Manipulation
Trump Media & Technology Group has raised concerns about potential market manipulation affecting its stock value, prompting a request for a congressional investigation into the matter.
Trump Media & Technology Group has requested Congress to look into their concerns about potential illegal activities affecting their stock price.
In a letter revealed on Wednesday, Devin Nunes, the CEO of Trump Media, which owns Truth Social, informed the GOP Chairmen of various House Committees about the urgent issue of possible manipulation of their company's stock price.
Nunes wrote in a letter that there are strong signs of illegal manipulation of DJT stock.
He mentioned that Trump Media has been one of the priciest stocks to borrow. To short a stock, traders need to borrow shares from another source first.
Nunes pointed out that there are indications of "naked" short selling, where individuals sell shares they do not own or have not borrowed.
According to the CEO of Trump Media, this practice is concerning because it often results in experienced market players benefiting at the cost of individual retail investors.
Some experts are doubtful about the market manipulation claims. Jonathan Macey, a professor at Yale Law School, mentioned to CNN via email that there doesn't seem to be any evidence supporting these allegations.
Jay Ritter, a finance professor at the University of Florida, believes that there are clear reasons why some traders are betting against Trump Media.
According to Ritter, short sellers are targeting the stock because they believe it is overvalued. He explains that it is evident to anyone, even without a background in finance, that the stock is significantly overpriced and likely to decrease in value.
Former U.S. President Donald Trump attends a campaign event on April 02, 2024 in Grand Rapids, Michigan.
Former U.S. President Donald Trump attends a campaign event on April 02, 2024 in Grand Rapids, Michigan.
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Trump Media stock is experiencing extreme turbulence due to recent financial losses. In 2023, the company reported a loss of $58 million despite generating very little revenue. When compared to other social media companies, Trump Media's price-to-sales ratio is significantly higher, indicating potential overvaluation.
Trump Media's share price has dropped by more than half since reaching $66 in late March.
According to a letter sent to Congress by Trump Media, data shows that over 60% of the company's stock volume can be attributed to just four market participants: Citadel Securities, Virtu Americas, G1 Execution Services, and Jane Street Capital.
Ritter mentions that Citadel Securities and Jane Street are two of the busiest market makers for almost every stock in the US. He emphasized that this applies to nearly all stocks.
Recently, Nunes sent a letter to Nasdaq, where Trump Media shares are traded, raising concerns about market manipulation. The letter also mentioned Citadel Securities, which was established by Republican billionaire donor Ken Griffin.
Citadel Securities responded to Trump Media's accusations by calling Devin Nunes a "loser" who blames 'naked short selling' for his stock price drop. The spokesperson also mentioned that Nunes would be fired if he worked for Citadel Securities.
There was no comment from Citadel Securities regarding the recent letter from Trump Media.
This story has been updated with additional context and quotes.
