| Chrkeller said: Seems like this should be illegal some how. |
It sort of is. You buy shares, then pump them up by false advertising in a public forum. It's why you need to declare that you are a shareholder if you say xxx is a good buy.
In this case, because it's known that this is a Reddit-driven boost. It's public knowledge so probably not fraudulent at that point.
It's a bit misguided to assume that this is going to harm long term investment banks and so forth. They price shares according to the value of the company, which presumably hasn't changed due to this fluctuation. They can sell their current shorts at a loss, and switch to longer term shorts in anticipation of Reddit getting bored in a couple of months....
Remember that a short is just a sale of something you don't actually own. Like renting a game after release rather than buying, because you think the price will go down later (well, actually selling a game you rented and later buying a new copy to return to the shop you rent from).
