4 ms·
You could maybe short it into a takeover. If enough stocks are available (or volume is low enough that the price effect of the short is sufficient), the company
by dx034 8y ago
You could maybe short it into a takeover. If enough stocks are available (or volume is low enough that the price effect of the short is sufficient), the company could become cheap enough to be bought by a competitor. But I'm not sure if that would work in practice, as shorts would likely close positions as soon as rumors about the takeover come out.
- basetop 8y agoI suppose that's possible for an already distressed company under financial strain desperate to sell itself to avoid bankruptcy. But I'm not sure how that would work on a profitable company. No board of directors would approve selling itself for an short-driven discount. A takeover of a profitable company involves a premium, not a discount. A profitable company can wait out a short position. Hell insiders of a profitable company would be buying shares in droves in anticipation of crushing shorts.