Dem
51
GOP
49
We already noted this briefly earlier this week, but it's worthy of a bit more attention. If you are convinced that some stock will go up in value, it is easy to make money on it: just buy the stock and later sell it when it has gone up. But can you make money when you are convinced a stock will go down? Yup. Wall Street has thought of that. You borrow the stock from someone who owns it, sell it, and buy it back when the price goes down and return it to the owner cheaper, but otherwise undamaged. This is called short selling and is quite common. The lender always charges a fee when lending the stock, so it has to drop more than the fee to make a profit short selling. It's also very risky because if the stock price doubles or triples before the deadline for returning it, you have to buy it back for a much higher price than you sold it for. Nevertheless, so many people feel that Donald Trump's TMTG (Trump Media and Technology Group, ticker symbol DJT) is so overvalued at $48.81 (yesterday's closing price), that DJT is the most shorted stock in the country. If it drops precipitously, the people shorting it will make out like bandits. But if it drops only a little, or not at all, they could lose a lot of money.
A. Lot. of. Money. In March, short-sellers of DJT lost $126 million, expecting it to collapse when TMTG merged with Digital World Acquisition Company. Not only did it not collapse, but it has gone up from its $36.94 pre-merger price.
Shorting DJT isn't so easy. There are 137 million shares of the stock outstanding, but 132 million are owned by Trump and insiders, and they are not lending them to be shorted. That leaves only 5 million that could be shorted. And 4.9 million of them are already on loan being shorted. This means the fee lenders can charge is now enormous, which in turn means the stock has to take a huge nosedive to make shorting profitable.
And there is more. There are DJT warrants being traded as well as puts and calls. If you want to get into the weeds on this, try this article. But the bottom line is that there are many investors who think DJT is wildly overvalued and are willing to put their money where their minds are. (V)
Note: Sometime on Thursday, The New York Times issued a correction that DJT is not the most shorted stock, it is the most shorted SPAC stock.