Shorting certainly can push down a company's share price. I've...

Shorting certainly can push down a company's share price. I've done it myself, mostly during the GFC when the market just kept on falling.

Here is how.

I trade with Macquarie Prime.

To make it simple, imagine I hold no Atlas shares (i.e. I am a fool)

By shorting AGO, I am actually borrowing AGO stock from Macquarie Prime.

Atlas opens at $3.85. I decide to sell (borrow) 400,000 AGO units at $3.70, which means the top 56 buy orders would be activated. The share price will react by adjusting to $3.70. Traders will notice the sudden 4% drop in the AGO share price.

Two things will probably then happen.

1/ a few buyers near $3.70 will pull their buy orders on the grounds that someone knows ?something? and the share price is about to fall significantly.

2/ a few holders will also fear someone knows ?something? and will sell to lock in a profit or get out before the share price falls further.

These sellers drive the share price down further and before you know what hit you, AGO has dropped 8% in 2 minutes and no one knows why.

As the shorter, I will eventually try to buy (so I can return to Macquarie Prime) 400,000 units of AGO at a price lower than what I sold them for so I can make a profit.

Of course if Atlas were to announce the sale of Ridley and Balla Balla during this period out, then the share price will increase dramatically and I will now have to buy back the shares I sold at a price far higher than $3.79. I will make a loss, curse my stupidity and go back to doing my normal job.

It was a favoured choice for many during the GFC because share prices were falling. So traders could sell (with borrowed stock) at a certain price, and feel confident that over the next few months, the company?s share price would at some point be lower than what it was on day one when they borrowed stock to sell (short).

Macquarie Prime by the way would be happy to lend me the shares to short. Not only would they charge me brokerage on the sell and buy, but because I did it using a margin loan, they would also charge me interest.

Knowing how dangerous shorting can be to a stock, Macquarie do not allow shorting on MQG!! A real shame given they have fallen from $100 to a current $41!

Cheers