Does short selling increase the number of shares of a stock?

Question

Can this happen? If I own 100 shares in a company, held at a brokerage firm, and someone borrows them to sell, and if I am in fact the buyer, my account would show I own 200 shares.  Since 100 of those were actual shares I loaned out and bought back, can those be lent out again, and if I am the buyer, my account would show I own 300 shares, no?  If every holder of shares had 100 shares, and if the same thing happened, has the total number of shares of that company tripled?

Bob Baerker · Answer

Here's what happens with shorting:
+100 (A) owns the shares and lends them to B
-100 (B) shorts them, selling them to C
+100 (C) owns the shares
The physical shares are in street name at (C's) broker.  (A) owns the shares but only as a book entry.
The combined position of (A) and (B) is called a synthetic position and they offset.
Regarding the specifics of your question, you are (A) and (C) and therefore you own 200 shares of which 100 are synthetic and 100 are physical.
The short answer is that shorting does not create new shares. The float remains the same regardless of the number of short positions.

Does short selling increase the number of shares of a stock?

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