Trump admin could be harder on short-sellers, Carson Block says

Investing.com — Carson Block, founder of Muddy Waters (NYSE:) Capital, predicts that short-sellers might face increased scrutiny under the Trump administration. 

Speaking with Bloomberg Television, Block noted that the populist narratives of Donald Trump and Elon Musk often align, with both leaders previously blaming short-sellers for declines in the stock prices of their companies, including Tesla (NASDAQ:) Inc. and Trump Media & Technology Group.

“We’ve already had some rhetoric, we might have some more anti-short seller rhetoric,” Block said during the interview. 

While he doubts Trump or Musk genuinely believes short-sellers are to blame for their stock performance, Block believes the populist tendency to target short-sellers aligns with broader political messaging.

Block has gained prominence for high-profile bets against companies. Recently, he revealed a short position against cosmetics brand Elf Beauty, alleging overstated revenues and sluggish sales. Elf Beauty denied the claims.

In his interview with Bloomberg Block said that historically, Republican administrations have taken a lighter approach to market regulation. 

However, he expressed uncertainty about whether Trump would scale back existing rules, emphasizing the importance of who will head the Securities and Exchange Commission under the new administration.

Despite the potential for intensified rhetoric, Block has previously highlighted the role of short-sellers in modern markets. 

Bloomberg noted in its report that Muddy Waters has built at least four new short positions in the past 12 months.