If Hindenburg is correct, I believe they provided a valuable information service to market participants by researching, writing, and releasing that report.

It happens that the economic incentive arose from shorting, but could have just as easily come (less efficiently) from buying naked puts.

I don’t think options should exist, either. Hindenburg is just doing journalism.

Shorting serves a valuable purpose. It removes capital from the hands of people stupid enough to believe fraudsters, and reallocates it to people who dont. The whole purpose of markets is to facilitate the efficient allocation of capital, and shorting is clearly an important part of that.

If Hindenburg weren't financially incentivized to uncover this fraud, it seems likely they would not have bothered and many more people would get scammed by Nikola.

That’s what journalism is for.

¿Por qué no los dos?

Journalists got to Theranos first, and short sellers got to Nikola first. With both in play, the odds of a timely exposé go up.

Worth nothing that Theranos wasn't public, there was no opportunity to short-sell. If there had been they might have been exposed much earlier and done a lot less harm.

I knew several people who said what they were claiming was impossible but they didn't really have any interest in being the whistleblower.

Only one of those things is beneficial to society or business.

Care to back up that opinion? I'm quite curious to know why you think Hindenburg exposing this fraud to the world, and consequently saving countless more people from being scammed, isn't beneficial to society and legitimate business.

Short sellers provide liquidity to the market by providing purchasable shares in an equity when none might exist. Short selling does NOT provide infinite market gambling. Short selling is incredibly risky with an unlimited downside, these types of investors can lose all their money and then some pretty easily. Short sellers in Tesla over the years have bled huge losses. "The markets can remain irrational longer than you can remain solvent." (Keynes) is appropriate here, as stocks like Tesla continue to climb the short sellers keep having to infuse cash to cover the mark-to-market prices. Eventually, they run out of cash.

Not quite. Short sellers have to "borrow" shares from your broker, who is on the hook to replace them if the short seller cannot.

Even more clarification, they loan the shares to the short seller from individual brokerage accounts without most of those individuals even knowing.

Short selling is just ... selling. Every time a shareholder sells a stock for whatever reason, they effectively short it.

Selling stock you own and selling stock you borrowed from somebody else with the obligation to return it at some point are pretty different

Yes, the latter is far riskier and obligates you to buy shares later, meaning you have to have more conviction in your investing thesis.

(Disclosure: I’m short $NKLA after Hindenburg published. I believe it’s more likely going to the teens [and possibly worse] in 2020 than sustainably into the mid-40s. If it holds $30+ through 2020, I’ll probably cover.)

For the seller it's different, to market it's just a sell.