Somewhat. The short-selling is being done by professionals who know in advance that they have access to lines of credit and other sources of funds to bridge short-term market disruptions. Not advocating naked short-selling, but there's a big difference between professionally managed hedge funds with diversified portfolios and sources of emergency funding doing this, based on reality-based projections of a company's profitability, and a bunch of amateurs all buying small long positions (in many cases on margin) because they're all excited about a big run-up driven by internet chatter and imagining that they're part of some awesome new thing where the little guys make mountains of money "beating the big hedge funds". This will end badly for the vast majority of these excited "little guys", and it's unlikely that any of the big hedge funds (much less the "big guys" behind them) will suffer lasting harm.
Short selling above 100% is insane. They got caught with their dicks in the cookie jar. Barring some fuckery, if people hold, they will go bust. That's what this is all about. Loses on such shorts are unlimited.
The SEC and Fed will not allow the blatant market manipulation to continue. Leaving aside the extreme riskiness of naked short-selling and the inexcusable laziness of the SEC in allowing it on a large scale with no meaningful regulation, in this particular case, the short-sellers' (naked and otherwise) positions are grounded in the underlying reality of the financial prospects of Gamestop, while the suckers who have been persuaded to drive up the share price by buying and holding at absurdly inflated prices are grounded solely in a plan to profit by market manipulation. The SEC will rightly focus on punishing the people who are suckering the suckers, as they are the only participants in this mess who will (before SEC action against them) end up with big profits.
Somewhat. The short-selling is being done by professionals who know in advance that they have access to lines of credit and other sources of funds to bridge short-term market disruptions. Not advocating naked short-selling, but there's a big difference between professionally managed hedge funds with diversified portfolios and sources of emergency funding doing this, based on reality-based projections of a company's profitability, and a bunch of amateurs all buying small long positions (in many cases on margin) because they're all excited about a big run-up driven by internet chatter and imagining that they're part of some awesome new thing where the little guys make mountains of money "beating the big hedge funds". This will end badly for the vast majority of these excited "little guys", and it's unlikely that any of the big hedge funds (much less the "big guys" behind them) will suffer lasting harm.
Short selling above 100% is insane. They got caught with their dicks in the cookie jar. Barring some fuckery, if people hold, they will go bust. That's what this is all about. Loses on such shorts are unlimited.
The SEC and Fed will not allow the blatant market manipulation to continue. Leaving aside the extreme riskiness of naked short-selling and the inexcusable laziness of the SEC in allowing it on a large scale with no meaningful regulation, in this particular case, the short-sellers' (naked and otherwise) positions are grounded in the underlying reality of the financial prospects of Gamestop, while the suckers who have been persuaded to drive up the share price by buying and holding at absurdly inflated prices are grounded solely in a plan to profit by market manipulation. The SEC will rightly focus on punishing the people who are suckering the suckers, as they are the only participants in this mess who will (before SEC action against them) end up with big profits.