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Is it not also possible that the shorting itself influences the direction of the stock/performance of the company? I'm not sure you can make a statement like yo
by dclowd9901 6y ago
Is it not also possible that the shorting itself influences the direction of the stock/performance of the company? I'm not sure you can make a statement like you're making. There, to me, is not a direct cause/effect relationship here.
- dcolkitt 6y agoHow would short selling cause a company's next quarterly earnings to be disappointing?
- totalZero 6y agoI sometimes wonder how much the share price affects management's opinion of its own performance. If valuation is viewed as a report card of sorts, then management is likely to seek financing and damage control when shares are cheap. Doubt of that nature could have a negative effect on their ability to perform. Not to mention that share price likely plays a role in their personal wealth.
- xxs 6y agoStock price affects regular engineers/developers, if they have stock options for example.
- MattGaiser 6y agoIt influences the direction of the stock price perhaps, but why the fundamentals?
- xxs 6y agoThe easiest part - cut workforce to improve bottom line (and share prices, as management gets their own stock options), kill R&D. Engineers* quit as part of their remuneration packages are stock options. Overall perception and morale, hard to acquire new talents, etc.
- dclowd9901 6y agoCompanies can and do leverage the capital provided by their stock value, so just there would be an influence (less value = less capital = less ability to make market moves), but beyond that, I think, as others had mentioned, it could have an outsize negative psychological affect on the workforce. Plus, it could cause a feedback loop of sorts, as other investors might look at the short and jump in on the chance that someone knows something they don't, causing it to further decline, causing a multiplication on the above issues.