Trump Media's share price saw a significant increase of over 12% in afternoon trading on Monday, continuing a remarkable rise that began in mid-April. The company, which owns the Truth Social app frequently used by former President Donald Trump, has seen its share prices more than double since hitting a low point in mid-April.
The recent surge in Trump Media's stock price has added billions of dollars to the company's market capitalization and to Trump's stake, despite no significant improvements in the company's bottom line. Some experts believe that recent statements and regulatory filings targeting short sellers may have contributed to the increase in share prices.
Jay Ritter, a professor of business at the University of Florida, suggested that the company's efforts to make it difficult for shareholders to loan their shares to short sellers could be driving up the stock price. He also mentioned the possibility of a short squeeze, where short sellers are forced to repurchase shares, further driving up prices.
Although Trump Media remains a "meme stock" with little connection between its market valuation and business performance, the company's association with Donald Trump and the support of his political followers have helped boost its stock price. Despite having significant losses and minimal revenue in its social media business, Trump Media's market capitalization is currently estimated at around $8 billion, far exceeding traditional valuation metrics.
Ritter predicts that Trump Media's share price will eventually plummet to the low single digits as meme stocks tend to be overvalued and result in poor long-term returns. The company's recent request for a House investigation into potential manipulation by short sellers may also be contributing to the price increase.