> Do short sellers really do that much damage? Surely they're just part of the price-discovery mechanism for a stock? Imagine a small or midcap company that is

> Do short sellers really do that much damage? Surely they're just part of the price-discovery mechanism for a stock? Imagine a small or midcap company that is a solid, profitable business, just hanging out on the market, doing it's thing, not seeing that much trading activity, with only a tiny fraction of shares actually trading hands any given day. Then, one day, there is a concerted attack by multiple parties who borrow and sell short far more stocks than is ever traded in a single day. The added selling pressure overwhelms the market and the price tanks. This catches the eye of media, who start publishing articles asking what's going on. Some articles are even paid for by the short sellers themselves. Prominent people start pulling opinions out of their ass about how the business has no future, the board and executives are incompetent etc etc. It's a vicious cycle and down the stock goes. Now, why, if this is all just an artifact of shorting, and it is in fact a solid, profitable business with a bright future, can't this be easily countered by simply pointing that out and buying the shares at a discount until the market catches on and the price skyrockets back up? Because, unfortunately, it's much easier to just go with the momentum and jump on the shorting bandwagon, betting the stock will go down even more. Even if you tried to stem the drop, the short sellers can just borrow even more stocks and continue to overwhelm you with selling pressure. This dynamic plays out all the time in US stock markets, and this isn't even taking into account abusive naked shorting, which is actually kinda sorta illegal except even the rules against that aren't meaningfully enforced.