Investors who were bearish on a stock may have chosen to short-sell shares in the hopes that they could cover at a lower price.
Short selling is when a broker facilitates the actions of an investor who wishes to take on the risk of replacing sold shares of a particular stock because he or she believes the price will be lower when he or she replaces the inventory.
The broker passes the proceeds of the sale (minus a fee) along to the investor who is taking the risk of replacing the shares, and charges the investor interest or fees as long as the shares are outstanding. Investors need to cover the short before prices go up and it results in a loss for them.
Covering means to buy the same number of shares which were shorted to restock the inventory of the broker who facilitated the sale. If the stock in question suddenly starts trending upwards with no sign of reversal, many short-sellers will scramble to cover their short positions before the price gets too high.
Of course, the surge of demand as short sellers buy to cover will cause the prices to inflate more quickly than they otherwise would.
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