Short selling is an investment strategy where an investor borrows shares of a stock, sells them at the current market price, and hopes to buy them back later at a lower price. If the stock price drops, the investor can repurchase the shares at this lower price, return them to the lender, and pocket the difference as profit. However, if the stock price rises instead, the investor faces potentially unlimited losses, as they must still buy back the shares to return them. This strategy is often used by traders who believe that a particular stock, such as those of companies, will decline in value.