When you’re shorting a stock, you’re borrowing shares from someone and selling those shares, but you must eventually give those same number of shares of that stock back. People do this because if you sell the stock for more than you eventually buy it back for, you just made money on a stock price falling. A short squeeze happens when a stock that is being shorted a lot is going up in price. The people who are shorting the stock then want to buy it back as soon as possible so they don’t lose even more money. This makes the stock price go up even more, which means even more losses for people in the short position who haven’t bought it back yet. This can escalate very quickly as we saw with GME a few years ago.
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