-- CEO to short seller*
Short sellers evoke pretty strong feelings. Particularly among CEO's whose companies are the targets of short sellers. My advice to them:
1) Quarterback your team and stop looking at the scoreboard. Other than in the short term, where the market's irrationality is maximal, strong execution is ultimately recognized by investors. Don't obsess about your stock price. Except...
2) The exception to advice #1 is when you obviously are running out of money and investors sell your stock (and others short your stock) because they know a deal is coming in which you will be negotiating from weakness. "We won't raise money down here" when you have less than a year of cash on the balance sheet is a great thing to say when you want us to wonder if you know what you're doing. Mind your balance sheet.
3) Messy cap structures are magnets to short sellers. Layers of long-term warrants provide downside protection to high-risk shorting, particularly with small and micro cap stocks. Holders of convertible debt routinely short the underlying common stock to hedge their exposure. Sloppy cap structures make a company's common stock a derivative, and disassociate share price from fundamentals.
I rarely short stocks, and I have no tolerance for those who do it dishonestly. There is no defense for selling short (or trading of any type for that matter) with knowledge of a confidential financing, for example. But short selling, when done by the rules, is not going away.
The best response to short sellers? Prove them wrong. Execute.
Smile widely and say "Short my stock? You go right ahead..."
*Not really; actually from (link removed because there was some unappealing stuff further down that page)