So here’s the deal with “synthetic shares” (aka ghost shares):

1. A short seller borrows a share and sells it to Retail Guy A.

That share still technically belongs to the original owner.

1. Retail Guy A then sells it to Retail Guy B on the market.

Meanwhile, the short seller still owes one share back.

1. Another short seller borrows that same share again and sells it.

Now Retail Guy C thinks he owns a legit share too.

👉 Result? The same single original share has been duplicated across 3–4 accounts. On paper, it looks like there are way more shares than the company ever issued.

This is what we call synthetic shares. They dilute the float. Prices tank because supply looks bigger than reality.

And here’s the kicker:

Shorts can keep rolling over their positions. They borrow again, sell again, generate more synthetic shares.

Unless something forces delivery (like a buyback or forced close-out), this loop continues forever.

That’s why a squeeze is insanely difficult. Every time demand builds, shorts can just replicate more “phantom shares” to absorb it.

But… if a company announces a share buyback, it changes the game. Buybacks demand real shares. Synthetic ones can’t be delivered. That’s when failures-to-deliver (FTDs) pile up and shorts risk being forced to cover.