Matt Levine said it well about this non-story: "[DiIorio] then decided to put $100,000 of his own money into a penny-stock company that supposedly made computer chips. ("I bought this company on hype," he says.) The company then announced a reverse merger with a travel company, because that is how things go in the penny stock world; corporate identities are pretty fluid. The stock soared, and then lost almost all of its value. "DiIorio took a loss from the peak stock value of well over $1 million," though I am not sure why you'd measure his losses that way."
I don't think it's a non-story the fact that some market participants can short sell non-existent amounts of stocks. Is this common knowledge? Did everyone already know this but me?
Yes? I mean software engineers don't typically know, as well as everyone that abstractly dismisses the finance profession because "those guys have no souls and destroy the economy"
But there's allot of interesting nuances there and knowledge is power
The million dollars he mentions is a mark-to-market loss versus the peak value of the position. Many traders think about stock in terms of current market value, rather than the initial investment or the number of shares.
However, this doesn't mean that a trader would have been able to sell a million dollars worth of stock at that peak price, without substantially pushing the stock price lower.
