The share price for the parent company of former President Donald Trump's Truth Social website is still experiencing rollercoaster-like surges and dips, and one potential reason for its volatility could be from a form of illegal trading.
As of Friday afternoon, the share price of Trump Media and Technology Group (TMTG) is hovering around $36 per share on the Nasdaq Composite, which is up from its record low of approximately $23 per share last week. Truth Social CEO Devin Nunes said on Friday that TMTG's stock price was being artificially driven down by an illegal practice known as "naked" short-selling, in which speculators effectively bet on the stock price to go down without actually buying or borrowing them, then attempting to buy them at the lower price to cover.
“This is particularly troubling given that 'naked' short selling often entails sophisticated market participants profiting at the expense of retail investors,” Nunes said in a letter to the Securities and Exchange Commission (SEC).
READ MORE: Wall Street is now betting on Trump's Truth Social stock to fail
Nunes named Citadel Securities in his letter to the SEC as one of the "sophisticated market participants" allegedly involved in the naked short-selling of TMTG shares, which is a significant player in the short market. However, a spokesperson for Citadel Securities told the Wall Street Journal that Nunes is simply looking for a scapegoat for the stock's poor performance in financial markets since its initial public offering (IPO) launched in late March.
"Devin Nunes is the proverbial loser who tries to blame 'naked short selling' for his falling stock price," the spokesperson said. "Nunes is exactly the type of person Donald Trump would have fired on 'The Apprentice.' If he worked for Citadel Securities, we would fire him, as ability and integrity are at the center of everything we do."
A TMTG spokesperson fired back at Citadel Securities in a separate statement, calling the company a "corporate behemoth" which has been previously "fined and censured for an incredibly wide range of offenses including issues related to naked short selling, and is world famous for screwing over everyday retail investors at the behest of other corporations."
"[Citadel Securities] is the last company on earth that should lecture anyone on 'integrity,'" the TMTG spokesperson added.
READ MORE: Trump sues his Truth Social business partners after stock loses $4 billion in first week of trading
TMTG has been regarded as the most-shorted stock on Wall Street since it went public. While it traded at nearly $70 per share after launching its IPO, the stock has since lost approximately 50% of its value in less than a month.
The stock's plunge in share price was attributed to an SEC filing that showed the company had roughly $58 million in losses in 2023, and that it was dependent on the funding of the special purpose acquisition company (SPAC) it merged with ahead of its IPO to stay operational. Institutional investors remain wary of the stock due to its rapid ups and downs, and NPR recently reported that the most at-risk group of traders are the retail investors still holding out hope it will rebound to its original share price.
One of those institutional investors is billionaire Expedia Group chairman Barry Diller, who likened TMTG to a "meme stock" not unlike stocks that experienced rapid growth and sudden plunges in 2021, like Gamestop and AMC Theaters.
"I mean, it's ridiculous. The company has no revenue," Diller told CNBC. "It’s a scam, just like everything [Trump's] ever been involved in is some sort of con."
READ MORE: 'Stupid': Billionaire investor says people buying 'scam' Trump media stock are 'dopes'
