High or low short interest doesn’t directly/absolutely correlate with ability of shorts to close their positions.

There’s not a yes/no answer to your question.

There's nothing particularly different between a company having 99.99% short interest and 100.01% short interest.

If the shares were printed on stock certificates how would you get to 100.01% short interest?

When you sell your stock certificate, you hand it over to someone who can loan it out themselves.

As a thought exercise, consider that I can borrow your stock and sell it right back to you short. We can repeat this process a million times. 1 million shares short now based on 1 share.

This is not naked shorting because borrowed the stock from you each time with you willingly participating.

This was very helpful thank you.

It would take a bit more time, because stock certificates are a pain to handle. But I would let you borrow my stock certificates (for interest and with good collateral), you would sell them to someone; then that person might let you borrow them (for interest and with good collateral) and you could sell them to another someone (or the same someone, whatever).

Certificated stock is slightly less fungible than shares of book-entry stock; because I probably want you to return a single certificate with my shares, and you may have to separate or combine certificates which takes time and money. One of the many reasons certificated stock has been on the way out.

Thanks, this cleared up my (mis)understanding!

This is where a block chain will be useful to make sure that there is a fool proof locking mechanism.

When you short a stock you sell it. Whoever you sold it to can loan it again. There's no limit to that.

Technically there is should be only one person owning the stock and only one person who can short it at a time.

That is why the system needs something like a block chain semaphore.

If they were printed on stock certificates, how would you get to 0.01% short interest? You get to any other number by repeating that process.

Imagine a company with 1 share of stock floating. Abel buys that share and loans it to Baker (via Abel's broker). Baker borrows the share and sells it to Charlie. Charlie loans their share to Diane. Diane sells it to Earl. Earl loans their share to Fred. Fred sells it to Gary...

The recursive nature is what i was not understanding, thank you.

naked short selling. https://en.wikipedia.org/wiki/Naked_short_selling

No, naked refers to not having the borrow. More than 100% can be borrowed if someone buys it from someone who borrowed it and loans it to someone else. That's just short, whatever the percentage, not naked short.

This helped me understand the difference, thanks!

Not enough to matter. At sufficient price there will be a seller. The company can create stock and sell it if the current holders don't.

> At sufficient price there will be a seller.

When the price is, let's say, 10k or more, then the poor sod having a short position now has a really huge problem. And the WSB people are attempting to do force exactly this - basically, a distributed game of chicken at a world-wide scale with many billions of dollars at stake.

> The company can create stock and sell it if the current holders don't.

That process takes time to set up and exposes the company doing this to image and legal liability - if enough people shout "market manipulation" and file lawsuits, something may stick in the end. Gamestop, AMC etc. will avoid such a drastic step, I believe. Also, there's a side risk of stochastic terrorism in that case, aka one person gambling their life savings away and now going on a "revenge", which is not to be underestimated given how riled up the situation is.

(Disclosure: long AMC, NOK)

Companies cannot issue more shares than they are authorized to issue. They have to do Formal Corporate Things to issue new shares.

Hertz was within a day of issuing more shares before the SEC told them to fuck off because it was bankrupt and the prospectus was literally “you will likely lose all of your money immediately”.

GameStop has had enough time to do an additional offering. It can happen in a couple of days.

> Hertz was within a day of issuing more shares before the SEC told them to fuck off

Your timing is off, Hertz was selling shares in the morning, and stopped when SEC called them. They stopped selling promptly, but not before "Hertz Global issued 13,912,368 shares under the ATM Program for net proceeds of approximately $29 million"

https://www.sec.gov/ix?doc=/Archives/edgar/data/47129/000165...

Gamestop already had an ATM offering they registered for in December; I'm awaiting the news of what price they sold at with popcorn at the ready.

Exactly.

Their boards authorize it. It takes a phone call to have a board meeting. A company could do a board meeting by tweeting each other if they wanted. Filing that a private placement (to the short holders) has occurred is followup paperwork. A company that gets immensely overvalued is doing their shareholders a disservice by not capturing that valuation.

The articles of incorporation dictate what a company needs to do to issue shares. GameStop, for example, requires a vote of the majority of voting shares (of which there are 50 billion votes among the preferred shareholders and 300 million votes among the common shareholders).

That said GameStop is authorized for 300 million common shares and there are only 70 million outstanding according to this table so if their corporate treasury has been at all competent they might be sitting on a huge pile of cash right now.

If they wished a quick way to bankruptcy, that would certainly be it.

Make enemies and robbing both your customers and your investors in 1 single move. I don't think there has been anything as foul in history, has there?

Having a high stock price does altogether nothing for the company if they can't sell stock. Similarly, having a low stock price doesn't bankrupt a company.

I think you missed my point.

Low stock price wont make a company bankrupt, agree.

But if in the process of doing so, you stole value from your own 19yr old stockholders.... then its pretty certain you just painted a bulleye on you. And... They are also your targer demographic customer base. Woops! Lets see how quickly your revenues dip to $0 after that.

If you have $0 revenue you dont have a business. Period.

It's GameStop... They already have garbage revenue. They don't have a business. They're failing. Hence the short. Issuing shares while the stock price is high is not only an everyday business move but it's also the correct thing for them to do here. AMC has already done it.

On Monday (yes, this Monday) AMC announced they would issue and sell 50 million shares. Yesterday (Wednesday) they announced they had finished selling all 50 million shares: https://investor.amctheatres.com/newsroom/news-details/2021/....

The shares available for purchase is also a significant factor. Most companies have some shares held by employees/execs/board members that cannot be traded on a whim.

Not always, it depends on the usual volume and the willingness of shareholders to sell. There was a smaller short squeeze in TSLA circa 2013 going to the ~90$ (pre-split) price range and IIRC short interest was "only" in the 30-50%.

In time they will print new shares to pay the executives 100s of millions each but printing those shares is not instantaneous and it is regulated.

If the business does not become profitable, they will keep diluting it to pay the executives and fund the operation till people no longer trade the stock.