RE: Shorts up at 9.61%21 Dec 2023 07:34
Shorting involves selling a stock that you don't own, then selling them to another investor hoping to buy back the stock at a lower price often paying interest on the value of the borrowed shares while the position is open.
Shorting, is essentially betting that the stock's price will decline. The trader can put out information stating why they think the stock will fall. Traders can’t co-operate with each other to harm a share but by reporting their short and issuing a paper to say why they are shorting, others may jump in. This can put downward pressure on the stock's price, increase the shorts and potentially harm the company's market value. If a company's stock is heavily shorted, like Petrofac, it may face challenges in raising capital, have short term funding issues or have problems with advanced payments, as potential investors or clients may be reluctant to get involved with a stock that is heavily shorted. It can create negative sentiment among investors, clients and the public, potentially impacting the company's reputation.
If losses occur, the share rises, this will result in the broker making margin calls against the trader. They must either deposit more cash or sell their position.
A short seller, if a share suddenly jumps higher, may have trouble finding enough shares to buy if other traders are shorting the stock.
IMHO the Shorters were right and Petrofac does/did have a short term liquidity problem due to legacy contracts, however, I also believe that the attack was coordinated and led to an unwarranted collapse in the share price. This should now start to reverse.
AIMO
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