Trump Media, the parent company of the former president’s Truth Social, has raised concerns about potential illegal activity impacting the price of its shares. The company alerted Nasdaq Inc. regarding suspected 'naked' short selling, a practice involving the selling of shares that are neither owned nor borrowed, which is generally considered illegal. In contrast, legitimate short sellers borrow shares before selling to benefit from declines in a company's share value.
In a letter to the exchange, the CEO of Trump Media outlined these concerns, indicating that the company's shares were on a list maintained by Nasdaq that suggests unlawful trading activity. The company's shares have experienced significant fluctuations, with a 50% decrease from its all-time high following its merger with a blank-check acquisition company to go public.
Despite being valued in the billions, Trump Media is facing financial challenges, having reported a $58 million loss in 2023 with minimal revenue. Experts have cautioned investors about the stock, citing the lack of fundamental support for its high valuation.
While shares of the company saw a 9.6% increase at the end of Friday's trading session, the ongoing concerns about potential illegal trading practices and the company's financial performance continue to impact its market standing.
