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Pedestrians walk past the Nasdaq Building on Tuesday, March 26, 2024 in New York. Trump Media, which operates the social media platform Truth Social, is now being replaced by Digital World on the Nasdaq Stock Exchange.
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CNN
—
Trump Media, the parent company of the former president's Truth Social, warned Nasdaq Inc. on Thursday of possible illegal activity that is causing the company's stock price to fall.
In a letter to the exchange, Trump Media (DJT) CEO Devin Nunes outlined what he believes could be considered a “naked” short sale.
Naked short sellers involve people selling stocks they don't own or owe. They then often try to buy stocks at a discount to cover themselves. This practice is generally illegal. On the other hand, legitimate short sellers, people who seek to profit from a decline in the value of a company's stock, borrow the stock before selling.
The letter was made public Friday in a filing with the Securities and Exchange Commission.
In his letter, Nunes also noted that the company's stock is on a list maintained by Nasdaq that indicates “illegal trading activity.”
“'Naked' short selling is particularly problematic given that it often involves sophisticated market participants profiting at the expense of retail investors,” he said.
Representatives for Nasdaq and Trump Media did not respond to requests for comment.
The company, majority-owned by former President Donald Trump, is down about 50% from its all-time high on March 26, the day after it merged with a blank-check acquisition company and went public.
Since then, the company's stock price has soared.
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The company is still worth billions of dollars, but it has struggled to turn a profit and is in need of cash. Experts have warned investors to be cautious when trading this stock as the company does not have the fundamentals to support its soaring price.
Trump Media lost $58 million in 2023, with revenue of just $4.1 million.
The company's stock ended Friday trading up about 9.6%.
This story has been updated with additional developments and background.
