The digital era · 2000–today
2021
The GameStop short squeeze
Retail traders buy a heavily shorted stock, forcing short sellers to buy back.
In January 2021, traders on social media piled into GameStop, a stock many hedge funds had sold short. As the price soared, short sellers had to buy back at a loss, pushing it higher still.
💡 Why it made sense then
When more shares are sold short than can easily be bought back, a burst of buying can trap the sellers.
Ideas it gave us
- 🎯 Short squeeze
A short squeeze is a sharp price rise that forces short sellers to buy shares back to limit their losses, which pushes the price even higher.
- 🎯 Short selling
Short selling is borrowing shares, selling them, and buying them back later, to profit if the price falls.
Practise with $10,000 in play money
Free. No real money involved.