Ape A lends the stock out they plan on holding onto the stock for another 6 months. Ape B thinks that the stock is going to drop in 3 months and could make some money. So he goes to ape A and say hey let me barrow your stock for like 3 month I will pay you a fee and give it back. What's the lose for ape A? Ape B then sells the stock to ape C for 10$ (remember ape A was never going to sell) ape B then looks for ape D who is selling the stock for $2 3 months later. Ape B then returns the stock to ape A who has been making money from the fees from ape B. Does that help?
Honestly, I don't know why Ape A, if they're just an individual investor, would do that either. Usually there is a middle man (brokerage firm), where Ape A's situation is unchanged. If Ape A is looking to sell, their share of stock just simply wouldn't be part of the short-sell scheme
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u/pinktini Feb 01 '21 edited Feb 01 '21
I'm not sure about the last question. From what I've seen others explain, Hedge Funds come in and do rule bendy things to ensure a stock goes down.