Also they're talking about how GME made people aware that short selling was a problem? The shorts got crushed..
https://mobile.twitter.com/elonmusk/status/12017814896391618...
Short selling is still an essential part of markets and price discovery, it’s not really that hard to understand why Elon is against it.
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We show that stock prices are more accurate when short sellers are more active. First, in a large panel of NYSE-listed stocks, intraday informational efficiency of prices improves with greater shorting flow. Second, at monthly and annual horizons, more shorting flow accelerates the incorporation of public information into prices. Third, greater shorting flow reduces post-earnings-announcement drift for negative earnings surprises. Fourth, short sellers change their trading around extreme return events in a way that aids price discovery and reduces divergence from fundamental values. These results are robust to various econometric specifications, and their magnitude is economically meaningful.
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[0]https://marginalrevolution.com/marginalrevolution/2021/01/sh...
It’s often argued that a small increase on most days is more important than large but rare inaccuracies, however it’s a question of how you’re measuring things. If you use a direct average vs square root of the sum of inaccuracies squared etc.
Additionally, I’d think that the small constant corrections of short sellers helps avoid most large cost corrections later.
However, once you accept those exceptions I think it’s surprisingly accurate.
Obviously I'm not thinking of spreading false rumors after taking up a short position or similar, but merely wanting to profit from identifying a potential price mismatch doesn't seem inherently wrong to me. Am I missing something?
Is it the lending part that's problematic?
Moreover if short selling was banned, people would just express the same view by selling a equity swap.