Basically, you "borrow" a stock and sell it at the current price, with a promise to return the share later. Let's say you borrow a single share, and sell it for 8 dollars. You now have 8 dollars, but also a debt of 1 share. Later, if the stock falls to 5 dollars, you buy a share and return it to the person you borrowed it from (usually your broker). You sold your borrowed share for 8 dollars, but had to buy one for 5, so you profited 3 dollars. However, let's say the stock goes up to 10 instead. When the person that loaned you stock wants it back (usually to sell it themselves) you'll have to buy a share for 10 to give back to them, resulting in a loss of 2 dollars. It's a way to make money when a stock goes down, however, it's very risky as your potential loss is unlimited (because the higher the stock goes, the more money you lose). In the gamestop case, the hedge fund shorted it at 8 dollars, but it's currently sitting over 300. So, if the lender that gave them the shares was to act on the loan (which apparently will happen this Friday), then the hedge fund will take a loss of 292 dollars per share.

Basically, you "borrow" a stock and sell it at the current price, with a promise to return the share later.

Let's say you borrow a single share, and sell it for 8 dollars. You now have 8 dollars, but also a debt of 1 share. Later, if the stock falls to 5 dollars, you buy a share and return it to the person you borrowed it from (usually your broker). You sold your borrowed share for 8 dollars, but had to buy one for 5, so you profited 3 dollars. However, let's say the stock goes up to 10 instead. When the person that loaned you stock wants it back (usually to sell it themselves) you'll have to buy a share for 10 to give back them, resulting in a loss of 2 dollars. It's a way to make money when a stock goes down, however, it's very risky as your potential loss is unlimited (because the higher the stock goes, the more money you lose).

In the gamestop case, the hedge fund shorted it at 8 dollars, but it's currently sitting over 300. So, if the lender that gave them the shares was to act on the loan (which apparently will happen this Friday), then the hedge fund will take a loss of 292 dollars per share.