dwagom04, I'm not a short seller, so I can't produce any personal documentation to "prove it" to you, but the proof is in how the process works. As you probably know, short selling works as follows:
1. The short sellers borrow shares from a broker
2. The shares are then sold on the open market
3. If all goes as planned, the stock falls in price
4. The shares are then repurchased, hopefully at a lower price
5. The short seller pockets the difference
Usually, shorting a company filing for bankruptcy would be a flawed strategy because no one would buy shares (step 2) of a company that has already announced a pending bankruptcy.
In BBBYQ's case, the short sellers banked on apes not comprehending the reality of the bankruptcy, and it worked like this:
1. The short seller borrowed shares
2. The shares were then sold to apes in denial driven by conspiracy theories
3. The company was granted bankruptcy, and all BBBYQ shares were "extinguished."
4. There were no shares in existence for repurchase
5. The short seller pocketed 100% of the value the shares were sold for in Step 2
Pretty cool for the short sellers but sucked for the apes. The story's moral is don't believe everything you hear, even if you desperately want it to be correct.
AI
