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And yet shorting exists and is hard, yet quite profitable. Sometimes the market gets it wrong because humans are fallible to herd mentality. The question to as

• AmericanChopper 6y ago
  > The question to ask is, do the fundamentals you mentioned justify the valuation? Your mistake is to think that it should. The valuation is exclusively a result of the demand for the shares. Under typical circumstances that valuation will reflect "the market's" sentiment on the underlying business, in the context of the broader economy. But there are situations where the demand for shares can be temporarily influenced by factors other than the nature of the underlying business. The short sellers had contractually committed to having a certain level of demand in the future, and other market participants exploited this fact for their own benefit. For that reason the price was temporarily misaligned with the underlying value. These temporary price fluctuations are a perfectly ordinary feature of any market, and can be caused by any number of different inefficiencies exerting a temporary influence on price before the market has time to correct itself. There's not much insight in commenting that a market is not perfectly efficient, because no market is. Events like this are remarkable because of their scale, but also because of how infrequently they occur. You could count all short squeezes of this scale on one hand. So what is the point of your comment? That massively inefficient pricing, while possible, almost never occurs?