Image courtesy of 123rf.com
Shares of Reddit, Inc. (NYSE: RDDT) and Trump Media & Technology Group Corp. (Nasdaq: DJT) experienced significant declines on Monday, with both stocks falling victim to intense short-selling pressure. As of 1:20 PM EDT, Reddit’s stock price dropped by 8.31% to $45.22, while DJT plummeted by 26.67% to $45.44.
Reddit and Trump Media & Technology Group Shares Plummet
The steep losses come as short sellers have targeted these companies, expressing skepticism about their long-term prospects and current valuations. DJT, in particular, has become the most heavily shorted SPAC in the U.S., with a short interest of $168.6 million and 11.69% of its float sold short. Reddit has also drawn bearish bets, with at least 7.1% of its free share float being shorted.Market analysts attribute the heavy short selling to various factors. For DJT, the limited availability of shares for shorting due to its SPAC status and high borrowing costs have made it an attractive target for short sellers.
Despite year-to-date mark-to-market losses of $158 million, bearish investors remain committed to their positions. Reddit’s stock, on the other hand, experienced a rapid decline of over 20% from its record high, which drew more short sellers looking to capitalize on its falling price.
Are Reddit and DJT Meme Stocks?
The meme stock phenomenon has also played a role in the trading activity surrounding these companies. DJT has been labeled a meme stock due to its rapid price increases, strong following among retail investors and association with former President Donald Trump.
Discussions on social media have revealed efforts by some investors to initiate a “Mother of All Short Squeezes” (MOASS) for DJT, further solidifying its meme stock status. While Reddit has not been explicitly labeled as a meme stock, its post-IPO volatility and heavy short-seller interest align with characteristics commonly associated with meme stocks.More By This Author:Three Stocks That Are Set Up For A Great Second Quarter Of 2024
BofA Boosts Micron’s PT to $144 Amid AI-Driven HBM Demand Surge
AT&T Dips In Premarket After Data Breach Affecting 73 Million Customers
