Short selling - statistics & facts
Short selling is when an investor effectively bets on the price of a financial asset falling. To do this, the investor borrows a certain number of shares (or some other asset), which will be returned in full at a later date. They can then sell the borrowed shares and purchase the same number back once the price has fallen, thus making a profit. This strategy only works when the share price does fall – otherwise, the borrowed stocks need to be repurchased at a higher price, causing a loss. The risk-reward ratio for short selling is high and, due to this, investors can incur great profits or losses. One of the most popular stocks shorted in April 2023 was the American online used-car retailer company, Carvana, with the majority of its float being shorted by investors.
