this post was submitted on 24 Feb 2024
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Shorting a stock in effect means selling a stock you don’t own. The stock market derives price based on supply and demand. When more people are selling than people are buying, the stock price goes down. There are many more dynamics at play than this though. Often there are investment firms which will identify a price mismatch and attempt to price out the short sellers by buying and pushing the price up. This can trigger a short squeeze which makes the price suddenly pop.
IPOs are exciting times to be a trader, but individuals are largely in for the ride. They can’t move the market. If they identify one of these larger plays they can join the fun. Game Stop was one of the first examples of a consumer-driven play, and it scared the shit out of institutions because it upended their risk models.