- Short interest in Trump Media (DJT) has risen about 31% since Dec. 18 to nearly 16 million shares worth roughly $218 million, the highest level since October 2025.
- The stock surged more than 30% after a proposed $6 billion all-stock merger with Google-backed TAE Technologies, including a roughly 63% two-day spike.
- Rising short interest alongside the rally signals skepticism about valuation and merger execution, increasing the risk of sharp volatility or a short squeeze.
- Trump's roughly 40% stake (about 115 million shares) is expected to be diluted to around 20%, even as the stock remains down nearly 60% over the past year.
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This convergence of rising short interest, merger-driven stock gains, and a large insider (Donald Trump) ownership stake represent a classic setup for a highly contested equity. The 31% jump in short interest following the December 18 announcement signals that a significant cohort of traders believe the recent rally is overextended or that risks—regulatory, financial, or operational—are being underestimated.
The $6 billion merger with TAE Technologies appears to have spurred much of the recent rally, raising expectations of new revenue engines tied to AI infrastructure or other emergent sectors. But the valuation shock has also created a fertile environment for short sellers. The rapid 63% two-day jump suggests some momentum traders have already priced in much of the expected upside, increasing risk of pullbacks.
Trump’s stake, initially ~40%, will be diluted to roughly 20% post-merger. That level of dilution may alter control dynamics and could reduce his ability to influence post-merger strategy or capture upside. It may also feed into concerns from short sellers about decision-making and whether projected synergies will materialize.
Additionally, the long-term chart tells a less sanguine story: the shares are down ~60% over the past year despite recent rallies. This suggests that past rallies may have been temporary or that underlying financials (losses, revenue growth, user-base, regulatory environment) have not yet justified sustained gains. Short interest rising even as the stock gains indicates asymmetric expectations—some expect a correction.
Strategic implications for investors, management, and regulators include:
- Risk of short squeeze: high short interest + concentrated supply of borrowable shares could lead to steep price swings if bearish participants scramble to cover. Also, high financing costs for borrow have historically made short positions expensive.
- Merger execution risk: integrating TAE Technologies, aligning expectations for AI infrastructure, regulatory approval—any misstep could trigger sharp downside. Short sellers may be betting on execution failure or regulatory pushback.
- Dilution and control: with Trump’s ownership projected to halve, investor trust, corporate governance, and alignment of long-term incentives may come under scrutiny. Earnings dilution, changes in voting power, and shifts in board representation are open questions.
- Valuation concerns: with 12-month losses of ~60%, and likely lacking consistent profit streams, recent gains may reflect speculative capital more than fundamentally improved operations. Investors should stress-test financials, cash burn, revenue diversity, and user growth metrics.
Supporting Notes
- Short interest has increased by ~31% since the merger announcement on December 18 to nearly 16 million shares.
- Value of bets against the stock stands at approximately $218 million.
- Stock is up over 30% since the merger announcement; it rose as much as 63% in the two days immediately following.
- Trump holds about 115 million shares (~40% of the company), a stake likely to decline to roughly 20% after the merger.
- Shares have lost nearly 60% over the past 12 months.