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Trump Media & Technology Group, the company behind the Truth Social app, experienced a dramatic stock market plunge this week. After an impressive surge earlier in the month, the stock, trading under the ticker DJT, saw a stark decline, falling as much as 39% from its peak on Tuesday. This two-day drop erased over $2.4 billion from former President Donald Trump's shareholdings in the business.

Trading at $34.68 by Thursday afternoon, DJT shares plunged 13.4% after hitting an intraday low of $33.41. This followed a prior 22% decrease on Wednesday, erasing the gains accumulated over more than five weeks that saw the stock reach an intraday high of $54.68 on Tuesday.

DJT shares have been compared to meme stocks, which often see wild price fluctuations based on social media hype rather than traditional financial metrics like revenue growth or profitability. Despite declining revenues and significant losses at Truth Social, Trump's media shares surged throughout much of October. This rally was attributed to tightening presidential race polls and prediction markets like Polymarket, which suggested improved odds for Trump's 2024 election chances.

The exact cause of the two-day sell-off remains unclear, but the stock attracted numerous speculators and short sellers who bet on DJT's decline. According to research group S3 Partners, part of the October surge might have been driven by short sellers covering their positions, a process known as a short squeeze.

"Trump and Media Group (DJT) stock, closely tied to Trump's election chances, faces high squeeze risk due to limited float and elevated short interest," S3 wrote on Tuesday. "Trump's 57% stake and current short losses intensify squeeze potential."

Trump's 115 million shares make him the largest investor in the company. At Tuesday's intraday peak, his stake was valued at almost $6.3 billion. However, the subsequent sell-off reduced the value of his holdings to about $3.8 billion by Thursday's intraday low.

These losses are considered paper wealth, as Trump has pledged not to sell his shares despite a lock-up period expiring last month that now allows him to liquidate his stake. With nearly 60% ownership of the company, any significant sell-off by Trump could flood the market with shares, potentially driving prices down even further.

Most DJT shareholders are small investors who bought shares to support the former president. As the stock plummeted, some investors voiced their determination to retaliate, blaming short sellers and the U.S. Securities and Exchange Commission (SEC).

"I was happy to strap my investment dollars to @realDonaldTrump and take all the financial arrows with him," wrote Chad Nedohin, a minister and shareholder who leads a DJT group on Truth Social. "The more they try to hurt DJT, the worse it's going to be for them in 2025." He concluded his post with the hashtag #TrumpTheSEC.