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A ‘short’ is the name for a type of stock trade. Basically, I have 10 shares in Company A. You borrow those shares and promise to give them back at the end of the week. Then you sell those shares, because you think they will be worth less at the end of the week and you can buy them back cheaply. If you’re right, the difference between the price now and the price in a week’s time is your profit on every share that you’re shorting. If you’re wrong, you can lose money because you have to buy the shares back even if they’re more expensive now.
There were a bunch of shorts on GameStop shares, so a meme-y stock trading subreddit realised they could inflate the price and – no matter what – those shorts would mean that someone had to buy their super expensive shares. They pushed the share price through the roof and are now raking in money due to it. Because some of the people shorting the stock are doubling down and buying up even more shorts, WSB (the subreddit) is still keeping the price high.
It would be market manipulation if they were deliberately setting out to raise the price by spreading false information, using insider knowledge, etc. As it is, all that’s happening is a bunch of redditors are telling each other to buy GameStop shares because they’re a good investment. The price is going up because WSB folks are willing to buy at prices much higher than the ‘real’ long-term value of a GameStop share.
Wait so is the timeframe on a short always one week? Also, is the short, as a “financial instrument”, supposed to facilitate any real, useful function, or is it a construct used exclusively to gamble with?
