Let's just assume that there are 100 shares of GameStop (worldwide) and go from there. Let's assume that the price per share/stock before all of this was $100 (in a "good" economy, etc.). How would this all work?

A nice timeline, step by step, line by line would be nice. For ex:

  1. Stock is selling at $100 per share (100 shares total). June 20XX

  2. Economy starts tanking, stock now at $95 per share. August 20XX

  3. People start predicting that it will go down further, thus they start "betting" (insert definitions that are accessible and not jargony), etc.

^ something like that would be nice. Thanks!

  • queenjamie [none/use name]
    ·
    4 years ago

    When you short a stock, you are actually ‘borrowing’ it, before immediately selling it to someone. You then hope the stock price goes down in the future, where you buy the stock back at the lower price and return it to the original owner. Your profits come from the change in price over that time. For example, a stock is $10, and you short it. When you have to return the stock to the original owner the stock price has dropped to $5. Thus, you made $5 by shorting the stock.

    Why would someone let you borrow their stock? What's in it for them?

    • VernetheJules [they/them]
      ·
      4 years ago

      "hey, can I borrow that stock you have? I'll pay you interest"

      Off of the top of my head, that's one way you, the actual stockholder, can make money off this. Like a loan, but with with stocks instead of money.

      • queenjamie [none/use name]
        ·
        4 years ago

        And I'm assuming that since you're the legal "owner" of the stocks, you can sell them even though someone else is borrowing them from you? I.e. that borrower will return the stock to the "new owner" (i.e. the person who you sold it to)?