Trump Media doubles down on illegal short-selling claims

investmentnews.com:

Donald Trump’s social media startup publicized a letter to the heads of various US House of Representatives committees, doubling down on claims that an illegal form of short selling may be hitting its stock.

Trump Media & Technology Group Corp. Chief Executive Officer Devin Nunes penned a letter asking for an investigation into the trading of the stock and whether laws including those governing racketeering and tax evasion were violated. The parent of Truth Social has flagged concern that so-called “naked” short sales, which involve betting against a stock without first borrowing shares, could potentially be occurring, hurting its loyal retail investors.

The stock has been volatile since going public four weeks ago, trading around $33 per share Wednesday, after hitting an intraday peak of $79.38 in its debut on the Nasdaq. Trump Media has captivated individual investors who piled into the stock and touted their investments across the Truth Social platform as a way to support Trump’s 2024 re-election campaign.

Trump Media’s letter is the latest salvo in a bid to place itself at the center of a battle between its supporters and Wall Street. The missive from Nunes, a former California Representative who left Congress to become CEO of Trump Media, echoed a note penned to Nasdaq Inc. Chair Adena Friedman seeking her help intervening against the potential naked short sales.

The startup’s roughly $4.5 billion valuation has drawn scrutiny, given it took in just $4.1 million in revenue last year and lost more than $50 million. By a traditional metric like price-to-sales ratio, the stock is valued at a more than 1,000 multiple. That’s more than 30 times the multiple of stock market darling Nvidia Corp., which is roughly 33 times.