They are running to the ground company that may survive with a fresh injection of capital, and destroying company that suddenly cannot raise more capital or have no more collateral for a loan.
Moreover they are this hedge fund are manipulating information to the level of a troll farm. I was a shareholder of AMD when they where starting to release the Zen architecture. Every other week, they were sending report of "problems" with the new architecture, or even basic feature behaving normally. Hedging is ok, but betting as they do is not. And when they get burned I celebrate!
Those don’t need to be misvalued to get capital, they just need to be properly valued.
In fact if they cannot get the capital it’s because of misvaluation! And other misvalued firms that will destroy value get that capital instead.
I'm not sure the world would have been a worse place for it to have been profitable to point out the failings of say, Theranos.
And the unlimited downside means that shorting startups that are merely unlikely to succeed wouldn't be worth the effort.
Shorting public companies that can survive COVID perfectly well by raising additional funds would be a terrible strategy too: their ability to raise funds won't really be dependent on their share price (they'll be raising debt funding instead) but every time they find a lender the share price will rebound.
Hard disagree here. Sometimes mis-valuing firms serves a LOT of people. There are many firms who could create value if only they had more capital to work with. As an example, it's very possible that a company hard hit by COVID could recover if they got fresh capital and used it to explore new business models that are quarantine-friendly. I'm all for kicking out non-believers from being involved in their equities in any way.
You can't short sell most early stage startups. If you don't believe in them you just don't invest in them. It's that simple.
As for companies who do bad things, like laundering money or misusing funds, we don't need to short their stock, we need to take them to court and get them punished.
You know which firms are really mis-valued? Hedge funds. They sit in armchairs in high rises on Wall Street and do nothing for me.