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Shorts don't affect the stock the price that way. They profit if the price goes down, sure. And lots of short interest might make people more likely to sell, wh
by jeffreyrogers 8y ago
Shorts don't affect the stock the price that way. They profit if the price goes down, sure. And lots of short interest might make people more likely to sell, which will drive the price down, but just shorting a stock doesn't have much effect on the price.
- sobani 8y agoShorting is selling a stock. Selling a stock lowers its price. The way shorting works is Alice lends a stock from Bob and gives him a small compensation for that. Then Alice sells that stock she lend. Somewhere in the future Alice will buy the stock and give it back to Bob. If the price goes up enouogh, Alice will (be forced to) cut her losses. For this she has to buy a stock, which will increase the price further. This can lead to a so called 'short squeeze' when shorters Carol and Dave also (are forced to) cut their losses, driving the price up even further. Right now >28% the TSLA float is sold short[0]. That must have an impact on the price. Also should a TSLA short squeeze ever happen, that's going to be epic. There will be enough Tesla believers that it's probable going to be hard to find that 28% for anything close to reasonable prices. [0] https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla%20Inc https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...