Trump Media shares experienced a sharp decline on Wednesday, closing down by more than 9.5%. The stock, which trades under the DJT ticker, ended the day at $45.16 per share, reflecting a loss of $4.77 per share. This drop continues a downward trend for the company, which remains well below its peak of over $70 per share during its public trading debut on March 26.

In a regulatory disclosure on Tuesday, Trump Media confirmed that former President Donald Trump received an additional 36 million shares of the company as part of an earnout bonus. This bonus was triggered because the share price remained above a benchmark of $17.50 for 20 trading days since the stock began trading publicly. Trump, who already owned more than 78 million shares, now holds a 65% stake in Trump Media, valued at $5.7 billion at a share price of $50.

However, Trump is barred from selling these shares for six months following the execution of Trump Media’s merger with the shell company Digital World Acquisition Corp. in late March.

Trump Media & Technology Group Corp (DJT)

RT Quote | Last NASDAQ LS, VOL From CTA | USD

45.88 quote price arrow up+1.97 (+4.49%)

Last | 3:39 PM EDT

The recent fluctuations in Trump Media’s share price have occurred amidst complaints from the company’s CEO, former Republican congressman Devin Nunes, about potential market manipulation by short sellers. The company has also encouraged shareholders to take measures to prevent their stock from being loaned for short-selling trades.

Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, informed CNBC that short interest in DJT shares amounts to more than $147 million, with 3.55 million shares shorted. He noted that the fees to borrow shares for short selling are "rising again," with stock borrow fees on existing shorts nearing 300% and rates on new stock borrows for short sales hitting 600%.

Dusaniwsky explained, "This means that existing short sellers need to have DJT’s stock price decline by $0.35 every day just to cover their short financing costs." He added that while there was increased short selling of Trump Media since the beginning of the year when it traded under the DWAC ticker, there has been an increase in covering short positions since mid-April.

More news on Donald Trump:

- Trump White House aide Steve Bannon loses appeal of contempt of Congress conviction.

- Trump Media investor convicted of insider trading ahead of merger.

- Trump Media hires a new auditor after the previous accounting firm was charged with ‘massive fraud’.

"For the year, there has been 1.4 million new shares shorted, worth $59 million, a 66% increase in total shares shorted," Dusaniwsky wrote. "But over the last thirty days we’ve seen 2.8 million shares of short covering, worth $97 million, a 40% decline in total shares shorted."

"DJT’s early April price drop still makes it a profitable month for DJT short sellers with a $79 million month-to-date mark-to-market profits, a 43% increase for the month," he said. "But since mid-April, DJT shorts are down $80 million in mark-to-market losses, a 62% decrease."

"These losses, coupled with the sky-high stock borrow costs, have squeezed some shorts out of their positions," he wrote. "Expect more short covering if DJT’s stock price stays at these levels or higher as the high stock borrow financing costs keep taking a bite out of prospective profits, even on weekends."

This significant volatility in Trump Media's stock underscores the complex dynamics at play in the market. Investors are navigating a landscape marked by regulatory developments, strategic corporate decisions, and the broader influence of market sentiment. The ongoing scrutiny of short-selling activities and the associated high borrowing costs add another layer of complexity to the trading environment for DJT shares.