Since a lot of traders buy/sell based on market sentiment and...

Since a lot of traders buy/sell based on market sentiment and the perceived short term movement of the stock,
I am a believer that co-coordinated shorting have an adverse effect on the share price.
IMO, a heavily shorted stocks would have a greater chance of trading significantly below the 'fair value'.
Just google 'gamestop short squeeze' and you will see how shortings could distort the share price both up and down.
i.e. when the shorters are opening their short positions, the shares will go down. When the shorters rush to cover their short positions, the shares will have to go back up.

Also, if you do some research on PNV (ASX), the shorters have been consistently reducing their short positions in the last 3-4 months - as a result the share price has recovered from 0.835 to 2.02 in the space of 3-4 months!

Researchers say shorting brings more efficiency and liquidity to the market. I think unregulated shorting isn't good for Dad & Mum retail investors as they don't have the sophisticated tools or enormous funds that the institutional shorters have.