I am not a financial guy so I don't understand any of the complexities, but from my understanding it is like betting against a company you think will fail. Somehow when the companies stock prices fall these hedge funds make money. But when the prices go up especially so drastically in this case going up like 50x in price they lose billions of dollars. That is literally all I know about them, so if you want to know how they actually work you will have to research it yourself.