I doubt it, why would he be shorting? M&M's are way smarter that the average trader, they work with other M&M's at times, they have level 3 and they don't short at the bottom. How much sense would that make?
Dilution would make more sense, but volume is too low for dilution. We have no reason to believe the company is diluting. They haven't been according to the latest filings. So, what's the answer, it has to be a big seller, or sellers.
Some were suggesting Nite was up to no good recently. These M&M's represent different brokerages and place orders for them. They only need to naked short (create shares out of thin air) when the up volume or buying demand out-strips sell volume. They must maintain an orderly market and fill demand for long shares even when there are no sellers. When M&M's do naked short, that does not drive the stock down, it adds to the rally by filling longs orders which causes the bid to rise.
As far as normal shorting of penny stocks, it can be done. Interactive brokers allows you to short penny stocks. But, the initial cost is very expensive, around $2 a share to short plus whatever the stock is trading for and you pay interest on the margin transaction. The $2 fee returned after you cover. Not too many people short penny's.
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