Not everyone is buying the Trump Media comeback story. In fact, a growing crowd of traders is actively betting against it.

Short sellers have dramatically increased their positions in Trump Media & Technology Group (DJT) following the company's high-profile merger announcement, suggesting that Wall Street skeptics think the recent rally is running on fumes.

Bearish Bets Hit $218 Million as Skepticism Grows

Here's what happened: Trump Media announced plans for a $6 billion all-stock merger with TAE Technologies, a company backed by Alphabet Inc.'s (GOOG) Google (GOOGL) that focuses on AI data centers. The news initially sent shares soaring, but short sellers saw something else entirely—an opportunity.

According to data from S3 Partners, short interest in Trump Media has climbed 31% since the December 18th merger announcement, reaching nearly 16 million shares. That's close to the highest level since October, and it represents a significant vote of no confidence from traders who think the money-losing company's stock will tumble back to earth.

At Friday's closing price of $13.77, those short positions add up to roughly $218 million in bets that the stock will decline. That's real money wagered on Trump Media's inability to sustain its recent momentum.

The stock did rally impressively at first—up more than 30% since the merger news broke, including a spike of as much as 63% in the first two trading sessions after the announcement. Shares ticked up another 4% on Friday and gained 0.45% in after-hours trading.

Trump's Ownership Gets Diluted While Stock Lags Long Term

President Donald Trump currently owns approximately 115 million shares of Trump Media, representing roughly 40% of the company. But here's the catch: his stake would shrink to around 20% once the merger closes due to dilution, according to Reuters. That's a significant haircut for the company's largest shareholder and namesake.

And despite the recent bounce, the bigger picture remains grim. Trump Media shares are still down nearly 60% over the past 12 months, reflecting persistent concerns about the company's financial health and whether its pivot into AI data centers will actually pan out.

The short-term price action looks decent, but the medium and long-term outlook tells a different story—one that short sellers are clearly banking on.