Despite "receiving" $40,000 in your example, you have a $40,000 margin loan debt and $40,000 less in buying or shorting power. Your "investment" is $40,000.
Furthermore if one shorted JBII at $4, at $1 their online brokerage account would say "75% profit" -- it is absolutely impossible to profit more than 100% on a short position.
But don't take my word for it -- use the simple calculator in the link above. Call Etrade. Call Ameritrade. Ask somebody with actual successful shorting experience.
The reason why short sales are limited to a return of 100% is that they create a liability the moment they are instituted. While the liability does not translate into an investment of real money by the short seller, it is essentially the same thing as investing the money: it is a liability that needs to be paid back in the future. The short seller is hoping that this liability will disappear, and for this to happen the shares would need to go to zero. This is why the maximum gain on a short sale is 100%. The maximum amount the short seller could ever take home is the proceeds from the short sale - in the case of our example, $5,000 (the same amount as the initial liability). When calculating the return of a short sale, you need to compare the amount the trader gets to keep to the initial amount of the liability. Had the trade in our example turned against you, you (as the short seller) would owe not only the initial proceeds amount but also the excess amount, and this would come out of your pocket.
Market Data 
Markets 
AI
