Wall Street Beats Co-Founder Herb Greenberg expressed skepticism over Trump Media & Technology Group Corp.'s (NASDAQ:DJT)push for a legislative probe into the short-selling of its shares, terming it a "diversion tactic."
What Happened: Greenberg shared his thoughts on the recent move by Trump Media during Thursday's episode of "Last Call" by CNBC.
"This is more of a diversion tactic," he said.
"It reminds me a lot of the battle between the short-sellers, many years ago, with Overstock.com."
Herberg recalled Overstock.com's short-selling debacle where CEO Patrick Byrne was constantly battling "naked shorting" by investors. In the end, it was revealed that short sellers were the actual victims who ended up "paying far more than they normally would have" and also resulted in Byrne stepping down as the CEO.
Trump Media CEO David Nunes has urged lawmakers to investigate eight firms over the short-selling of its shares. Among the accused short sellers is Citadel, whose CEO Ken Griffin is a major Republican donor.
"Beware of what you wish for. Because these stocks, especially thinly traded like this, it's the elevator up, get rid of the short sellers, no natural buyers. When reality hits it is the elevator shaft down," Greenberg warned.
"This is more of a diversion tactic," says @herbgreenberg on Trump Media pushing lawmakers to probe 8 firms over short-selling of $DJT shares. "It reminds me a lot of the battle between the short-sellers, many years ago, with " pic.twitter.com/OqxK756nSH
— Last Call (@LastCallCNBC) May 3, 2024
Why It Matters: This comes amid a high-profile insider trading trial tied to Trump Media, which kicked off in New York earlier this week. The defendant, Bruce Garelick, is charged with unlawful trading in the shares of a shell company before its merger with Trump Media was announced.
Additionally, Trump Media recently awarded former U.S. President Donald Trump 36 million additional shares, pushing his total stake in the company to over $5.7 billion.
Price Action: On Thursday, DJT shares closed at $48.68, marking a 7.87% increase from the previous close.
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