Standard disclaimer: I am not a financial advisor and trading the stock market involves risk. Do not bet more than you can afford to lose.

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The only thing more delicious than watching Trump’s campaign falter is watching his social media company falter – and watching him profit from both that company and his misguided supporters who have propped up Trump and Truth Social’s stock price.

Having been fortunate enough to have a few thousand dollars to play with, I’ve taken some guilty pleasure in shorting Truth Social shares over the past month, profiting from both Trump’s missteps and the idiocy of his followers/shareholders. The stock, which has tracked Trump’s prospects rather than the company’s fundamentals, is therefore a great vehicle for anyone looking to try and make a quick buck, with the added pleasure of doing so at the expense of his supporters.

Before I go into more detail, here is a quick overview of my personal account to clarify what I am talking about.

As you can see, I shorted 200 shares of Truth Social (DJT ticker) at $31.98 after the stock began to fall following a spike when Trump survived the assassination attempt. Within three weeks of shorting the stock – and the last three weeks have been truly crazy – the stock is down over $7, or more than 20%. That’s a nice little $1,600 (book value) gain in a very short period of time.

Shorten: A brief introduction

Shorting became famous through the excellent film The big short filmin which some investors made millions by betting that the value of subprime mortgage bundles would collapse during the 2008 housing crisis. Traditional investing involves buying a financial instrument in the hope that its value will increase; as many of you know, Short circuit bets that the value will go down. In the stock market, this means (to put it in an exaggerated way) that you borrow a stock at its current value and hopefully buy/pay it back later at a lower value and pocket the difference. A concrete example: Truth Social is trading at around $24 today. If you short the stock today at $24 and the price drops to $14 in a few weeks and you close your position, you pocket the $10 price gap (multiplied by the number of shares you shorted).

One of the key differences is risk. While those who buy the stock at $24/share can lose a maximum of $24/share, those who short the stock can potentially lose much more. If the stock goes to $124 and you get out, you’re out $100/share – something those who have been caught up in the short squeezes of other meme stocks like GameStop have experienced all too well.

Because of this potential risk, not all brokerage accounts allow you to short sell stocks. Typically, you will need a margin account that includes a buffer, so if you deposit $5,000 into a margin account, you may only be able to use half of that money to short sell a stock (different brokers have different buffer percentages).

One more note: Some stocks – like GameStop and DJT – have a borrowing fee, essentially a percentage interest rate that’s the same as if you took out a loan. Because many people knew Truth Social was a loser, the initial margin rate on Truth Social stock’s IPO was astronomical – over 500%, an unheard of amount for short selling. That’s why I didn’t get in when the price initially rose to nearly $80/share. The borrowing fee is currently about 5% per year (see screenshot above), a small price to pay for what is likely a short-term investment.

The risks

Again, the stock price usually has little to do with the actual value of the company (more on that later), as its price followed Trump’s election chances for most of the summer. Biden’s disastrous debate performance and the assassination attempt? The price shoots up. Kamala’s nomination and Trump’s terrible press conference and Musk’s interview on X (Truth Social’s competitor!)? The price falls.

So if you want to join me on this journey of shorting Truth Social stock, be prepared for the volatility that often accompanies meme stocks and presidential campaigns. A Harris/Walz scandal, a health scare, or a poor debate performance can send your account into the red, at least temporarily. If you hold out until the election, a Trump win would undoubtedly send the stock higher, potentially requiring you to either pump more money into your margin account and wait for the stock price to eventually come back down to earth, or close your position and take a loss.

However, there are three good reasons to short the stock and hold it at least until October.

Reason for short positions No. 1: Trump himself.

As we all know, Trump has always been a terrible candidate with self-destructive tendencies. And just as Kamala could experience a scandal, health scare, or poor debate performance, the odds of Trump experiencing another scandal (Egypt funding, anyone?), health scare, debate, or other fiasco are even higher. Additionally, the upcoming Democratic National Convention, the September sentencing hearing, and the likely retrial of the classified documents trial are all flashpoints that could cause a share price decline. As you can see from the chart to the right, the things Trump can control and those outside of his control — and a poor quarterly report — have caused the stock to fall from $40 a month ago after the assassination to below $24 today.

Reason for shorting #2: The company’s fundamentals are TERRIBLE.

The company – currently valued at a share price (market cap) of nearly $5 billion – had just $837,000 in revenue last quarter (see screenshot below). And that revenue is a DECREASE from the previous quarter. Mind you, that’s not profit, that’s revenue. Factoring in expenses, the company lost over $16 million. There are also reports that the number of active users (many of whom have grown bored since there aren’t many “libtards” on the platform to argue with) has declined. Although the $344 million the company has to spend keeps it from being in imminent danger of bankruptcy, its prospects for significant growth are slim, even with a streaming service in the works. As for the quality of its leadership, well, as many of you may remember, Devin Nunes is at the helm. Draw conclusions from that what you will. And draw what you will from that about a company – even a startup – that makes less than a million dollars in revenue, has lost tens of millions of dollars, and has a shrinking user base.

It’s almost as if this company was founded not for long-term survival, but as a scam to make Trump billions… Which brings us to point 3.

Reason for short positions #3: Trump will soon be able to sell his shares

Trump owns nearly 60% of Truth Social’s stock. At the end of September, Trump will finally be able to sell his shares. Trump likes cash.

That’s all you need to know. While Trump may not dump all 114 million shares at once, it’s safe to assume he’ll dump quite a bit in the five weeks leading up to Election Day. And since he knows that stock prices would plummet if he were to lose, the greater the likelihood of a loss, the more shares he’ll likely dump in a hurry. The laws of supply and demand definitely apply here – an oversupply of stocks means the stock price will fall.

When smart shareholders know this, they will of course sell their shares. before Trump’s stock could hit the market, meaning that barring major developments in the presidential campaign, the stock price could well fall in September. Of course, the more the stock price falls, the more profit those shorting the stock will make.

Concluding remarks

Is this all a sure thing? Of course not. The stock market and presidential elections never are. You venture into it at your own risk. And be prepared for a rollercoaster ride. But given the above, it’s probably one of the safer bets out there for making a good return in a relatively short period of time. And it comes with the added pleasure of betting against Trump and “owning” those who were fanatical enough in their support to buy his stocks. That’s half the fun I get from trying these kinds of things.

You can set up a margin account for short selling with any regular or online broker like E-Trade or Robinhood. I am happy with WeBull because of the ease of transferring funds, the user interface and the data (blatant advertisement/referral link: www.webull.com/…)

Final tip: If you’re still holding and the stock is actually heading to zero, you may want to close your position before the stock stops trading. While you could still get your money back eventually, the process may take longer and be more complex.

As mentioned at the beginning, I am not a financial advisor and therefore welcome any other feedback, suggestions, corrections or questions!