4 ms·

Too bad GoDaddy isn't a publicly traded company. I'd love to see their stock plummet due to short selling.

• redthrowaway 15y ago
  Short selling doesn't cause a stock's price to go down; it allows you to profit if it does. Basically, if I want to short a stock, I borrow it from you and agree to give it back on a certain day (paying some fee for the privilege). I then sell the stock. If it goes down, I can buy it back for less money, return it to you, and pocket the difference. If it goes up, I still have to return the stock to you, so I'm out the difference. There are ways of manipulating stock prices, but they're generally illegal and short-selling isn't really one of them.
  • jbwyme 15y ago
    This is not entirely true. When you short sale you are still essentially selling shares (although you don't own them). Someone else is still buying these at the price you sold for. If enough people short a stock it will act as heavy sell pressure and drive the price per share down just as it would if everyone decided to dump their existing shares. You see pps go up a lot when all of the shorts start covering because they have to "buy" the shares they sold back causing buying pressure.
  • tg3 15y ago
    If many people short-sell a stock, it increases the supply of that stock and reduces the demand (an increase of people wanting to sell it) which drives down prices. Short-selling isn't price manipulation, it's the inverse of buying a stock, which drives up the price.
    • redthrowaway 15y ago
      The same is true of simply selling the stock, except with a short sell there's a guarantee that it will be bought again. Now, a naked short sell can drive a stock's price down, but it's incredibly risky and can easily bankrupt the naked shorter.