And many traders are betting that the stock price will continue to fall further.

And many traders are betting that the stock price will continue to fall further.

Shares of Trump Media have erased all their gains since they began trading under the ticker DJT last month.

The stock closed down more than 8% Monday at $37.17 after falling about 11% earlier in the day. It had traded above $79 a share on March 26, the day of its debut.

But experts say it’s hard to draw any firm conclusions about what the stock price’s movement means. That’s because so many available shares — about 12%, one of the highest ratios of any active stock listing — reflect traders’ bets that the stock will fall, said Ihor Dusaniwsky, managing director at S3 Partners, a data and predictive analytics company.

This is called short-selling.

  • Flying Squid@lemmy.world
    21·
    6 months ago

    Shorting is basically getting a loan in stock, and expecting the stock to fall so that you can pay it back easier.

    I’m still confused by this… doesn’t it mean you have to pay for the stock if it doesn’t fall as well? So in that case, it helps benefit Truth Social?

    I guess I’m not understanding who benefits if shorting doesn’t work.

    • Omega@lemmy.world
      3·
      6 months ago

      Whoever actually owns the stock and whoever you sold it to both benefit from the stock increase. Basically, everyone wins except the one shorting.

      • Flying Squid@lemmy.world
        31·
        6 months ago

        In other words, that would end up generating money for Trump himself.

        Which sounds like a good enough reason not to make that gamble.

    • Khanzarate@lemmy.world
      3·
      6 months ago

      So you borrow a share of a stock from someone, promising to pay them back the shares and a little fee for them not having their shares available. You turn around and immediately sell their share. Let’s say the share was worth 100$, so you pocket that. You anticipate the stock dropping to 80, and if you’re right, when that happens you buy a stock of that company later and then give that stock to the guy you borrowed it from. You make 20$, pay that little fee, and go about your day.

      If it doesn’t hit your target though, at some point you decide to cut your losses, since the fees associated with not giving back the stock are prohibitively high by design. If the share stayed at 100$, you just lose that little fee. If its 150$, you paid the fee and 50$.

      You always buy a stock later, but shorting weakens a stock because you sold first and that reflects in the stocks price, potentially triggering other sales.

      If you wanna say “ive never bought truth social stock” you can’t short, although you can still say “I’ve never invested in truth social”.