Can a single share of stock be shorted multiple times?

Question

Is it possible for a single share of stock to be shorted multiple times?
Concrete example:
Imagine we have five people with the following motivations:
Person A owns a share of company ABC and wants to lend it out to collect interest.  
Person B wants to short one share of company ABC.  
Person C wants to own one share of company ABC and lend it out to collect interest.  
Person D wants to short one share of company ABC.  
Person E wants to own one share of company ABC.

The following then occurs (in order):
Person A lends their share to Person B  
Person B sells their share to Person C  
Person C lends their share to Person D  
Person D sells their share to Person E

This would result in 3 long positions of one share each, and 2 short positions of one share each, all based on one "real" share. If the above is allowed, you could imagine this occurring infinitely, allowing unlimited long and unlimited - 1 short positions, so long as the net equaled one long share.
Is this possible? Are there any regulatory or procedural systems in place to prevent the above from happening?

nanoman · Accepted Answer

Yes, a share can be lent and shorted more than once:

If a short-seller borrows shares from one brokerage and sells to another brokerage, the second brokerage could then lend those shares to another short-seller. This results in the same shares counted twice as "shares sold short."
Many of GameStop's shorted shares may have been borrowed, sold, and borrowed again, producing the 100.6% ratio of shorts to shares outstanding.
This rarely happens, but it has happened before.
... According to Frank Fabozzi's book Short Selling, Palm reached a peak short interest ratio of 147.6% in mid-2000.

really · Answer

Yes!
And this has happened in the past, most famously in the porsche-volkswagen short squeeze

user106660 · Answer

If you hold "long" positions in a cash, rather than margin account, those shares cannot be shorted. I have shares in a high dividend partnership. I transfer these shares to a "cash" account before ex-div date to ensure I receive dividend from the partnership rather than receiving "payment in lieu". This act may force a short to cover. After dividends I return shares to a margin account. If done by many folks at the same time it could have the effect of propping up price heading to ex div and reducing the price as shares are returned to the short-able pool post div. This could allow dividend reinvestment at a favorable price.

Answered by user106660 on March 6, 2021

Can a single share of stock be shorted multiple times?

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