Star Alliance International Corp (STAL)

[Chef69]

The hypothesis that naked short selling has no effect on the price of a stock is incorrect. Naked short selling, like traditional short selling, can influence the stock price:

1. **Increasing Supply**: Selling shares, whether borrowed legitimately or not, increases the available supply in the market. An increase in supply, with constant or decreasing demand, can lead to a drop in price.

2. **Sentiment Impact**: Large volumes of short selling, naked or otherwise, can negatively affect market sentiment towards a stock, leading others to sell, further driving down the price.

3. **Market Manipulation**: Naked short selling can be used to manipulate market prices. By flooding the market with sell orders for shares that don't exist, it can artificially depress stock prices.

In summary, whether shares are borrowed legitimately or not, selling them (short selling) adds to the market's supply of the stock, potentially impacting its price. The act of naked short selling, due to its illegality and the potential for larger, unregulated volumes, can have an even more pronounced effect.