From our ever popular Questions In Guardian Headlines We Can Answer series:
Why has the Adani Group shed US$90bn in value and what do short sellers have to gain?
Not that the short sellers will have captured that $90 billion, only some small portion of it. But it’s a pretty simple idea – those who bet on prices falling gain if and when prices fall.
As to the value to us all out here, it is of value if someone ramping their own shares is shown to be a spiv ramping their own shares. Being able to profit from providing this information is a good incentive.
Losing money if an allegation of spivvery turns out to be untrue is also an excellent incentive.
Since value is an imaginary quantity, there’s no $90 billion to capture. The short sellers got their money from other speculators. It’s a zero sum game.
When the target company engages in flag-waving, claiming that it’s “an attack on India”, you know they’re getting desperate.
Especially when the target company hasn’t “shed” anything, Andrew M. It got its money from investors when it issued the stock. Share price doesn’t alter that. Might make a difference if the company was proposing to raise more capital….
Of course if people connected with the company are holding stock themselves, they’ve have seen the value of it fall. Tough. That’s nothing to do with the company itself. Separate entity.
Unfortunately, the people losing out here are likely to be the suckers who got taken in by the spiv, rather than the spiv himself (yes Nicola – it’s a he).
That the suckers might be cross at the spiv may be useful, but that’s a flakier incentive feedback loop.
BiS; It was, two and a half billion dollars worth, up until about yesterday…
https://www.reuters.com/markets/deals/indias-adani-enterprises-calls-off-share-sale-source-says-2023-02-01/