Former President Donald Trump may have a fierce new opponent in Ken Griffin. The billionaire founder of Citadel Securities donated $5 million to Nikki Haley’s campaign before she dropped out of the 2024 presidential race. But now Citadel itself is taking aim at Trump Media & Technology Group (NASDAQ:DJT) stock.
Citadel Securities recently responded to TMTG CEO Devin Nunes’ claims of market manipulation. In fact, a Citadel spokesperson issued a scathing jab at Nunes. DJT stock is not responding well to the news and has been trending downward since markets opened.
This performance could be tied to the fact that Trump is once again on trial. But investors shouldn’t ignore the fact that one of Wall Street’s most powerful hedge funds has called out Nunes directly. Investors should also consider exactly why Citadel has called out the CEO.
Is Nunes a Loser? Or Is DJT Stock?
Despite the fact that DJT stock saw some growth last week, there’s no question that the company is struggling. Truth Social is losing money and boasts little revenue. Since it merged with Digital World Acquisition, shares have risen mostly on meme stock momentum. But trading has been volatile, supporting predictions that being linked to Trump is not making the stock a buy.
CEO Devin Nunes recently employed a strategy out of the meme stock handbook to explain why DJT stock is struggling. Rather than admit the company’s failures, the executive is trying to blame to naked short selling.
On April 18, Nunes penned a letter to Nasdaq Chair and CEO Adena Friedman. Nunes alleged that DJT stock has fallen victim to the illegal practice and named Citadel and several other firms as participants.
However, Citadel has since responded to the letter by calling out Nunes directly and did not mince words. A spokesperson from the hedge fund issued the following statement:
“Devin Nunes is the proverbial loser who tries to blame ‘naked short selling’ for his falling stock price. Nunes is exactly the type of person Donald Trump would have fired on The Apprentice. If he worked for Citadel Securities, we would fire him, as ability and integrity are at the center of everything we do.”
As The New Republic reports, this type of statement isn’t typically heard on Wall Street. Most firms would take the high road and ignore such allegations, especially as they are typically nothing more than baseless conspiracy theories. But one of the financial sector’s most powerful firms clearly saw fit to take a stand against Nunes. As Citadel noted, the decision to play the naked shorting card speaks to the CEO’s integrity and ability to lead.
Why It Matters
For investors, there’s an important lesson in this saga that goes beyond Nunes’ leadership. When anyone starts blaming a stock’s poor performance on naked shorting, it’s generally best to run the other way. As InvestorPlace reports, some retail investors love to play that card when it comes to struggling companies as a way of ignoring the actual problems.
A few meme stocks whose investors have cried wolf include AMC Entertainment (NYSE:AMC), Meta Materials (NASDAQ:MMAT) and Mullen Automotive (NASDAQ:MULN). Shares of these three companies are down 62%, 83% and 89% over the past six months, respectively. As of this writing, there are no credible reports of any illicit activity regarding how their shares have been bought and sold. This suggests that Nunes’ claims are baseless and, like its meme stock peers, DJT stock is simply proving to be a bad investment.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
