3 ms·

You have the definition of shorting right, but it doesn't mean that shorts cause a stock to drop. Beyond meat has had a crazy amount of people shorting it, but

• arcticbull 7y ago
  Short selling does directly cause the stock price to move down due to increased selling pressure. What you're seeing with BYND is not directly because of the act of short-selling, but the knock-on consequences and market dynamics. In part that has to do with the fact that BYND has very few of the total shares floated, all available shares were shorted (around 50% of float), and what little organic retail demand for their shares existed was enough to move the price materially. Eventually the market cap crossed the threshold for inclusion in the Russel 2000 index, forcing ETFs tracking the Russel to buy BYND shares too. This all caused the short-sellers to get liquidated, forcing them to buy at whatever price was available. This in turn liquidated more shorts. And so on. That was a textbook short squeeze. IMO the reason it didn't go all the way up to the moon is that brokerages were charging 140% APR to short the shares, so we were seeing consistent turnover in the short positions. The answer to "Who would buy BYND shares for $250" is "the trader and/or index fund who has no choice." It's worth more than 25% of the companies in the S&P 500, but only has $87M in revenues and 200 employees in a warehouse in LA with a handful of pea patties.