Please ensure Javascript is enabled for purposes of website accessibility
Search
Accessibility Menu

What Is Naked Short Selling?

By Jeremy Bowman – Updated Aug 9, 2025 at 11:30PM

Key Points

  • Naked short-selling involves selling unowned, unborrowed shares, aiming to profit by buying back cheaper.
  • It's illegal in the U.S. due to risks of market manipulation and creating artificial stock supply.
  • Accusations of naked short-selling sparked volatility, notably during the 2021 GameStop trading surge.
Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.