Short sellers notch $8.7B profit as SpaceX shares dip to IPO price • Hacker News Board

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#21

Post by anonymars » Fri, Jul 17, 2026, 6:29 PM UTC

dyauspitr wrote: post #20

Metricon wrote: post #17

Earlier quoted context omitted.

Keep in mind that unlike purchasing a stock where the most amount of money you can lose is the amount of money you spend buying the stock (assuming you didn't buy it on margin), if you directly short a stock, there's technically no limit to the amount of money you could lose. If a stock goes up 1000% after you short it, then you could lose far more money than you put into it.

You can always hedge your shorts and limit your downside. It’s not a huge issue unless you have absolutely no idea what you are doing.

It seems like a prudent warning in a thread explaining the very basics of short selling

Also worth mentioning you might be on the hook to buy it back at any time; after all, the person you borrowed it from may themselves wish to sell it. If widespread, this is the basis of "short squeezes" (e.g. of GameStop fame/infamy), if a lot of short sellers are trying to buy it back at the same time

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#22

Post by londons_explore » Fri, Jul 17, 2026, 6:29 PM UTC

Insiders who have locked up stocks but still want to sell could presumably just short the stock and take out a loan secured on the stock to get the financial effects of selling, without actually selling...

I wonder if that's what's happening with ~$1T of stocks currently locked up...

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#23

Post by laluser » Fri, Jul 17, 2026, 6:31 PM UTC

londons_explore wrote: post #22

Insiders who have locked up stocks but still want to sell could presumably just short the stock and take out a loan secured on the stock to get the financial effects of selling, without actually selling... I wonder if that's what's happening with ~$1T of stocks currently locked up...

That’s almost always prohibited.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#24

Post by paxys » Fri, Jul 17, 2026, 6:36 PM UTC

W-Stool wrote: post #3

If you make money shorting a stock, who do you make money from?

Normal sale - buy low, sell high, pocket the difference

Short selling - sell high, buy low, pocket the difference.

The money is coming from the same place in both cases - other people in the market.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#25

Post by rtkwe » Fri, Jul 17, 2026, 6:36 PM UTC

W-Stool wrote: post #3

If you make money shorting a stock, who do you make money from?

They're selling a borrowed stock, so any buyer on the market when you open the short position is where the money comes from. Short sellers get the money immediately and then pay fees to the people they borrowed from until they close the short position.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#26

Post by meowkit » Fri, Jul 17, 2026, 6:36 PM UTC

laluser wrote: post #23

londons_explore wrote: post #22

Insiders who have locked up stocks but still want to sell could presumably just short the stock and take out a loan secured on the stock to get the financial effects of selling, without actually selling... I wonder if that's what's happening with ~$1T of stocks currently locked up...

That’s almost always prohibited.

Given the current administration’s recent market behavior I would not be shocked if people got away with exactly what OP described.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#27

Post by rtkwe » Fri, Jul 17, 2026, 6:37 PM UTC

paxys wrote: post #24

W-Stool wrote: post #3

If you make money shorting a stock, who do you make money from?

Normal sale - buy low, sell high, pocket the difference Short selling - sell high, buy low, pocket the difference. The money is coming from the same place in both cases - other people in the market.

You're missing the cost to borrow on the stock which is a daily fee to continue borrowing the stock.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#28

Post by rtkwe » Fri, Jul 17, 2026, 6:39 PM UTC

vibcdingenjoyer wrote: post #5

W-Stool wrote: post #3

If you make money shorting a stock, who do you make money from?

Someone who bought and expected to make a profit, but reached a point where they hit their stop loss or just wanted to get out the trade at any cost and couldn’t bear to wait longer. Quite possible a redditor who frequents r/wallstreetbets and YOLOed in.

They're not really making any money when they close out their short position. The money came when they first opened the short position and sold the shares. When they close they just lock in how much they're going to net off the position.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#29

Post by mikestew » Fri, Jul 17, 2026, 6:40 PM UTC

t1234s wrote: post #13

bwfan123 wrote: post #8

Earlier quoted context omitted.

> who do you make money from? When you own stock at a broker in a margin account, you may sign an agreement to allow the broker to lend out your stock to someone else. For lending your stock, you are entitled to a stock-borrow fee which usually is quite small say 0.25%, and paid by the borrower (short-seller). The borrower then sells the stock to someone else. At a later point, the short seller closes their position…

You can also sell in the money call options in anticipation the stock will go down. You keep the premium the call buyer pays.

But to sell the calls, you should own the stock first. Puts can be bought w/o owning the stock. Granted, the put buyer pays the premium, so you don’t get guaranteed money in your pocket like you would selling calls.

Re: Short sellers notch $8.7B profit as SpaceX shares dip to IPO price

#30

Post by vl » Fri, Jul 17, 2026, 6:41 PM UTC

dyauspitr wrote: post #20

Metricon wrote: post #17

Earlier quoted context omitted.

Keep in mind that unlike purchasing a stock where the most amount of money you can lose is the amount of money you spend buying the stock (assuming you didn't buy it on margin), if you directly short a stock, there's technically no limit to the amount of money you could lose. If a stock goes up 1000% after you short it, then you could lose far more money than you put into it.

You can always hedge your shorts and limit your downside. It’s not a huge issue unless you have absolutely no idea what you are doing.

Does market closing and not trading continuously affects this?

If market opens at significantly different price, you may be forced to liquidate and loose more than expected.