Posts
/ #POST-241691
REDDIT
[Hypothetical Question] How much could shorts gain if a $4T stock collapsed
This is entirely hypothetical, but I'm trying to understand the scope of how shorts work when things go "well" for shorts. (Note: I hate options and have no plans to ever short anything, I'm an old-school Buffet-style investor, but I am very curious about shorts.)
Let's say some very hot company XYZ has a current mkt cap of $4 trillion. It is a market darling but also has a growing cadre of shorts, some of them big-time hedge funds betting on the worst for the company down the road.
Then let's say that day comes: the bubble bursts, and the dreams of the shorts come true. Within say, 48 hours, the stock loses half its value to $2T.
What kinds of gains could the shorts see? I would assume they'd be in the billions of dollars?