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A lot of Redditors hate the Reddit IPO | Reddit warned us that its users were a risk factor, and boy do they sound excited about shorting its stock. (www.theverge.com)
submitted 2 years ago by [M, B] to c/technology@lemmy.world
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A lot of Redditors hate the Reddit IPO | Reddit warned us that its users were a risk factor, and boy do they sound excited about shorting its stock.::Reddit seems like a likely candidate for a meme stock. But the actual reaction suggests that r/WallStreetBets isn’t going to send the stock to the moon.

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[–] 19 points 2 years ago (1 child)

And with shorting there's no upper limit to what you can lose.

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  • [+] -7 points 2 years ago (1 child)

    Not true

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  • [+] 14 points 2 years ago* (last edited 6 months ago) (3 children)
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  • [–] 16 points 2 years ago

    Yeah, if there's a "Superstonk" style event, the shares might jump to $1000 per share.

    Say you shorted 100 shares. If you shorted it at $30, the absolute maximum you could make is just under $30 per share, or $3000. But, if it jumps to $1000 per share, you would lose $970 per share, and owe $97,000.

    Maybe it's not technically possible for there to be "no upper limit" to what you could lose, but you could easily lose many multiples of the maximum possible gain.

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  • [–] 5 points 2 years ago

    No. There are lots of ways to short a stock which just means betting that a stock will fall. If you buy Puts you go short, you can only lose the money you spent on the Puts. What you are talking about is unhedged short selling but that is far from the only method to short a stock.

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