Short sellers who bet against Donald Trump’s media company, Trump Media and Technology Group, have faced significant losses, totaling as much as $420 million in the six weeks leading up to his stunning 2024 presidential election victory. S3 Partners, a financial analytics firm, reported on Wednesday that short sellers misjudged the stock, which saw a dramatic surge of nearly 200% from late September to election day.
Trump Media’s stock volatility and post-election surge
Trump Media’s stock, which underpins the president-elect’s social media platform, Truth Social, surged by 35% between Tuesday evening and Wednesday morning as it became clear that Trump would secure a second term in the White House. The company’s shares were up by more than 35% in the hours following the election results. However, the excitement was short-lived as the stock dropped by more than 18% by the close of trading on Wednesday, with a further 11% dip in pre-market trading on Thursday. The volatility led to significant financial repercussions for short sellers.
The fallout from short sellers’ incorrect bets
On election day, short sellers faced a significant loss of 14 million shares, valued at $77 million, with the stock price soaring to $5.50 per share. The stock’s dramatic rise and rapid fluctuations have made it a high-risk venture for short sellers, with analysts warning of a potential “short squeeze,” in which short sellers are forced to buy back shares to cover their positions, driving the stock price even higher. This situation is compounded by Trump’s strong and loyal following among retail investors, many of whom hold onto their shares through volatile swings with a “diamond hands” mentality similar to that of cryptocurrency holders.
Trump Media’s appeal and future prospects
Despite the ups and downs of the stock, Trump Media’s growth has been fueled by Trump supporters who view the company as a symbol of his political and business brand. With Truth Social and other ventures under its umbrella, the company has become more than just a media outlet—it is a representation of Trump’s continued influence on American politics. As the stock remains volatile and closely linked to Trump’s presidential success, analysts predict that its value may stabilize closer to his inauguration in January.
For Trump himself, the win has been lucrative, as his stake in the company has soared. Since March, his holding has been valued as high as $5.2 billion, according to Reuters, though it was worth $4.1 billion following the election. This has made Trump one of the biggest beneficiaries of the stock’s rise, capitalizing on both his political comeback and the fervent support of his base.
A wild ride for Trump Media’s stock and its investors
The rise of Trump Media’s stock has turned it into a fascinating case for market participants, with its extreme volatility, crowded short positions, and substantial losses creating a chaotic trading environment. In the days leading up to the election, the stock saw multiple trading halts as its price fluctuated wildly. The company’s connection to the election and the fervent engagement of its supporters have made it a unique financial entity, with some analysts watching its every move closely as a bellwether of Trump’s influence and the mood of his supporters.
In the broader context, online platforms like Polymarket and Kalshi, which allowed users to bet on the election outcome, also became a proxy for Trump’s chances. Polymarket alone saw over $3.7 billion in bets on the 2024 election, with some bettors, like the anonymous French gambler known as Théo, walking away with millions in profits. As Trump Media’s stock and its related markets continue to reflect his political trajectory, it remains to be seen how much more volatility—and potential profit—lies ahead for his supporters and investors.
