What most people don't realize is that short selling actually acts to create new shares. Here's how: When shares are sold short, they are actually borrowed from an existing shareholder who holds his shares in a "street name" account with a brokerage. These borrowed shares must be returned to the owning shareholder eventually. However, in the meantime, the newly created short sold shares are again part of the float. They have a multiplier effect on the share count.
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