Can i short fb stock

The metaverse may reduce its dependence on ads and significantly expand its ecosystem beyond traditional communication devices. FB stock investors have probably heard about several risks that would compel them to reconsider their positions. This would break the two companies but make FB stockholders owners of two separate stocks trading at high multiples. Additionally, there is always the risk of more regulatory action against the company based on new research reports or an opinion article on a reputable news agency.

Facebook has built an incredibly defensible platform that is likely to perform at elevated levels for years to come. The metaverse concept is intriguing, and it will be interesting to see how it benefits Facebook and other social media platforms. Moreover, FB stock trades at a surprisingly reasonable valuation which further adds to its bull case. On the date of publication, Muslim Farooque did not have either directly or indirectly any positions in the securities mentioned in this article.

The opinions expressed in this article are those of the writer, subject to the InvestorPlace. Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance.

Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Trading Trading Strategies. Key Takeaways There is no set time that an investor can hold a short position. The key requirement, however, is that the broker is willing to loan the stock for shorting. Investors can hold short positions as long as they are able to honor the margin requirements.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links. In January , followers of a popular Reddit page called Wall Street Bets banded together to cause a massive short squeeze in stocks of struggling companies with very high short interest, such as video game retailer GameStop.

This caused the company's share prices to soar fold and sixfold in January alone. Short selling can generally only be undertaken in a margin account , a type of account by which brokerages lend funds to investors and traders for trading securities. Therefore, the short seller has to monitor the margin account closely to ensure that the account always has sufficient capital or margin to maintain the short position.

If the stock that the trader has sold short suddenly spikes in price for example, if the company announces in its quarterly report that earnings have exceeded expectations , the trader will have to pump additional funds into the margin account right away, or else the brokerage may forcibly close out the short position and saddle the trader with the loss. If an investor shorts a stock, there is technically no limit to the amount they could lose because the stock can continue to go up in value indefinitely.

In some cases, investors could even end up owing their brokerage money. Short selling can serve the purposes of speculation or hedging. Speculators use short selling to capitalize on a potential decline in a specific security or across the market as a whole. Hedgers use the strategy to protect gains or mitigate losses in a security or portfolio. Notably, institutional investors and savvy individuals frequently engage in short-selling strategies for both speculation and hedging simultaneously.

Hedge funds are among the most active short-sellers and often use short positions in select stocks or sectors to hedge their long positions in other stocks.

Though short selling does present investors with an opportunity to make profits in a declining or neutral market, only sophisticated investors and advanced traders should attempt it due to its risk of infinite losses. Short selling is not a strategy many investors use, largely because the expectation is that stocks will rise in value over time.

In the long run, the stock market tends to go up, although it is occasionally punctuated by bear markets in which stocks tumble significantly.

For the typical investor with a long-term investment horizon, buying stocks is a less risky proposition than short selling. Short selling may only make sense in certain situations, such as in a protracted bear market or if a company is experiencing financial difficulties. That said, only advanced investors who have a high tolerance for risk and understand the risks associated with short selling should attempt it.

Trading commissions are not the only expense involved when short selling. There are other costs, such as:. Yes, you can lose much more than you have invested in a short sale; in theory, your losses can be infinite.

This is the reverse of a conventional "long" strategy, by which the maximum gain on a stock you have purchased is theoretically infinite, but the most you can lose is the amount invested. As an example of the devastating losses that can be inflicted on a short sale by runaway price appreciation, consider this situation.

An investor who had a short position of shares in GameStop as of Dec. Short selling has acquired a negative connotation because some unscrupulous short sellers have used unethical tactics to drive down stock prices. But when used in the correct manner, short selling facilitates the smooth functioning of financial markets by providing market liquidity, acting as a reality check for investors' unrealistic expectations and thus reducing the risk of market bubbles and enabling downside risk mitigation.

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