Yeah unfortunately for that theory you don’t account for the fact that destroying a micro cap stocks share price by shorting, naked or otherwise, can severely harm their ability to raise capital, therefore shorting a micro cap can be much more lucrative and low risk, especially since the chances of a micro going bankrupt are much higher.
So actually your scenario described makes much less sense for short sellers. If I was a piece of garbage shorter, I’d prey on small companies struggling to survive in the micro cap market. If I was successful and they fail, I don’t have to cover. Straight profit.