GameStop Short Squeeze
The GameStop short squeeze occurred in early 2021 when the stock price of GameStop, a video game retailer, surged dramatically. This happened because many investors, particularly hedge funds, had bet against the stock by short selling, expecting its price to fall. However, a group of retail investors on the Reddit forum r/WallStreetBets began buying shares, driving the price up and forcing short sellers to buy back shares at higher prices to cover their positions.
As the price skyrocketed, it created a feedback loop, further increasing demand and pushing the stock price even higher. This event highlighted the power of retail investors and raised questions about market dynamics, short selling practices, and the influence of social media on trading. The GameStop short squeeze became a significant moment in financial history, illustrating the potential for collective action among individual investors.