That is correct. Naked short shares are shares that the market makers sell to people even though they don't have someone selling them. Regular (not naked) short shares are ones that a MM has borrowed from someone who owns the shares but isn't actually selling them. In this manner only the number of shares that actually exist would ever be sold. Even normal borrowed shares have to eventually be bought by the MM. In both cases the company who sells the short shares makes money when they can buy them (called covering) at a lower price than they sold them for. This is why they will try to manipulate the price downward so they can make money. Some companies can be driven out of business by this naked short selling and in that case the MM gets to keep the money they received for the shares and never has to cover.