Short sellers, who had placed bets against the success of Donald Trump’s media company, suffered significant losses in the six weeks leading up to his victory in the 2024 election. According to a report from S3 Partners, a financial analytics firm, those who were short-selling Trump Media and Technology Group (TMGT) saw losses amounting to as much as $420 million during this period. This came as a result of an unexpected surge in the company’s stock price, which rose by nearly 200% from late September until Election Day.
Trump Media and Technology Group is the parent company of Truth Social, the social media platform launched by Trump following his presidency. In the days following Trump’s election victory on Tuesday, the company’s shares saw a dramatic 35% increase, with prices soaring as vote counts confirmed that Trump had won a second term as president. The stock’s dramatic rise served as a reminder of the volatility of stocks related to Trump’s political endeavors, catching many short sellers off guard.
S3 Partners highlighted the financial fallout in a report released on Wednesday, detailing how short sellers found themselves on the losing side as TMGT’s stock price surged, defying expectations. These investors had bet that the company’s stock would fall in value, but instead, it shot up rapidly. Between Tuesday evening and Wednesday morning, as election results became clear, the shares of Trump Media increased by 35%. However, the stock did experience a decline, falling by over 18% by the close of trading on Wednesday, and dropping another 11% in premarket trading the following day. Despite this decline, the overall increase in stock price since late September was nearly 200%, resulting in massive losses for those who had bet against it.
For short sellers, the losses were particularly severe. On the day that Trump was declared the winner of the election, short sellers lost approximately 14 million shares, valued at $5.50 per share, resulting in a loss of around $77 million. S3 Partners noted that the volatility of the stock, combined with a relatively small number of shares available for trading and the significant interest from retail investors, contributed to the rapid rise in the stock price, putting short sellers in a precarious position.
In financial terms, this scenario is referred to as a “short squeeze,” where a sudden surge in the price of a stock forces investors who have bet against it to buy shares in order to cover their positions. This further drives up the stock price, leading to even more losses for short sellers. S3 Partners pointed out that with Trump Media’s heightened volatility and its “meme stock” status—driven by significant retail investor interest—the company was at high risk of experiencing such a squeeze.
Trump Media’s flagship product, Truth Social, has garnered a loyal following of users, many of whom view it as an alternative to mainstream social media platforms like Twitter and Facebook. The platform has been central to Trump’s post-presidential communications, and his company has worked to expand its reach through streaming services and other ventures. Trump himself is the largest shareholder of Trump Media, and his stake in the company has grown significantly in recent months.
As Trump’s political comeback became more evident in the weeks leading up to the election, his media company’s stock began to reflect the renewed optimism surrounding his campaign. On the night of the election, as Trump’s chances of winning became more likely, hundreds of stock fans tuned in to an election watch party on Rumble, a video-sharing platform. At the event, attendees closely monitored the fluctuations in Trump Media’s stock price, along with the results of the election and the odds of Trump’s victory on the Polymarket gambling site.
Leading up to the election, the trading of Trump Media’s stock was highly volatile, with several halts in trading as the stock saw dramatic ups and downs. This chaotic trading environment created challenges for short sellers, who were betting that the stock would decline. However, the dramatic increases in the stock price caught them off guard, leading to significant financial losses.
The report from S3 Partners concluded that, due to the ongoing volatility and the growing interest from retail investors, Trump Media’s stock would likely remain a focal point for market participants, especially as the company continued to operate in the post-election period. With Trump’s victory, it was expected that the stock would face normalization as the election results were fully confirmed, but the company would remain in the spotlight for investors looking to make a profit.
For Trump, the stock rally has been a significant boon. Since March, his stake in Trump Media has increased substantially, reaching a peak value of $5.2 billion, according to calculations by Reuters. As of Wednesday, the value of his stake was estimated to be around $4.1 billion. Trump’s involvement in the media company and his fervent support for his stock have created an atmosphere in which the company’s shares are treated with the same kind of enthusiasm and commitment as some cryptocurrency investments, with holders pledging not to sell and holding onto their shares with a “diamond hands” mentality. This devotion to the stock has helped drive its value upward, even in the face of uncertainty and volatility.
In addition to traditional stock markets, platforms like Polymarket and Kalshi—online gambling sites that allow users to bet on political events—became important indicators of Trump’s re-election chances. Over $3.7 billion was spent by Polymarket users betting on the outcome of the presidential election, with some players placing large bets on Trump’s victory. One anonymous bettor, known only as Théo, won a substantial sum of $48 million after wagering $30 million on Trump’s success.
In the aftermath of the election, Trump Media remains a highly scrutinized entity. Its unique combination of political significance, volatile stock performance, and public interest in Trump’s media endeavors has made it a focal point for investors and market participants alike. While the stock has experienced ups and downs, its role as a “meme stock” and its connection to Trump’s political identity ensure that it will continue to be a key player in financial discussions.
The financial implications for short sellers have been stark, and the episode serves as a reminder of the unpredictable nature of the stock market, especially when politics and media intersect. As Trump prepares for his second term in office, it will be interesting to see how his media company evolves and how its stock continues to perform in the coming months. Whether or not the volatility continues remains to be seen, but one thing is clear: the stakes for those betting on Trump Media’s success or failure are higher than ever.
