A few additional dynamics

First, building on the limited float that Cartman cited, insiders are theoretically prevented from selling or hedging their shares for six months from DWAC’s acquisition of Truth Social (and then re-tickered DJT). This runs through late September. There is speculation that the board could waive the lock-up before the full six months lapse.

Second, for somebody who wants to short DJT, “the borrow” is inordinately expensive. The last cost I saw was 400% (annualized). Somebody shorting 1000 shares at $45 would face $180k in annual borrowing costs. On this $45,000 short sale, that’s roughly $3,500 / week in borrow costs. The short-seller is effectively betting that the stock will decline faster than these costs accrue. The borrow cost is volatile — it could go up or down but will likely remain expensive. And there’s a possibility that some short-sellers won’t be able to source “the borrow” required to maintain the position.

Third, option market-makers are momentum buyers and sellers of the stock in hedging their underlying positions, exacerbating moves in each direction.

Fourth, while I can’t believe there are any institutional owners who own the stock on a fundamental basis, there are quantitative trading firms that will buy the stock based on its momentum.

More generally, these momentum factors can be self-reinforcing in both directions. The stock declined from $66 to $22 from late March to mid-April and has now doubled in the past couple of weeks.

Is DJT is a meme stock? Not sure there’s a technical definition for that. I have no doubt that there are individuals who buy the stock because Trump delivered some zinger or he polled well or he’s facing a new lawsuit or they want to punish the shorts or whatever. But I think these factors pale against the trading dynamics referenced above.

At some point, insiders will become motivated sellers to capture their windfall gains. Once that kicks in, the stock will not be able to defy gravity. And it may run out of puff much sooner, as I can’t imagine there’s any prospect of a viable business model. Mainstream advertisers aren’t going to support the platform, and, if Trump’s re-elected, he’ll get 24/7 news coverage that I think would actually degrade the value of his social media platform.