Short sellers are closing in on both Rumble (RUM) and Phunware (PHUN), two companies formerly considered Trump trades. Both stocks enjoyed momentum during Donald Trump’s previous campaigns, primarily due to their close links to him. As Truth Social parent Trump Media & Technology Group (DJT) moved, so did they. But since Trump’s victory last week, all three stocks have been struggling while short interest in Rumble and Phunware continues to rise.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Why Are the Former Trump Trades Falling?
As the votes piled up for Trump during last week’s election, many companies linked to him enjoyed a surge. But since then, Rumble has been volatile, and Phunware has mostly trended downward, falling 21% over the past week. Meanwhile, DJT has struggled considerably in the wake of Trump’s victory. This is likely the fallout that occurs when unstable companies quickly surge, only to fall just as quickly.
Data from short analysis platform Fintel shows that short interest in both RUM and PHUN is quite high. It currently accounts for 18% of Rumble stock’s float and 13% of Phunware. While short sellers have 3.5 days to cover their Rumble positions, they have less than one to cover any Phunware bets. And currently, there are only 1,000 shares of RUM stock available to short.
All of these suggest that short sellers are indeed closing in on these two struggling stocks. No longer the leading Trump trades, investors recognize that just being linked to Trump is not enough to keep an unstable company in the green. With Tesla (TSLA) quickly emerging as the new Trump trade, stocks like Rumble and Phunware are looking like increasingly risky investments.
Wall Street Remains Sidelined on Rumble Stock
Turning to Wall Street, analysts have a Hold consensus rating on RUM stock based on two Holds assigned in the past three months, as indicated by the graphic below. After a 55% rally in its share price over the past year, the average RUM price target of $8 per share implies 14% upside potential.
Phunware also has only two ratings assigned in the past three months. While both are Buys, H.C. Wainwright recently lowered its PHUN stock price target from $9 to $6, a further indication that bearish sentiment toward the company is rising. Short sellers are likely to continue ramping up their bets against both stocks if these trends persist.
