Title. How does a stock move so violently without any news from the company?
In: Economics
Short squeeze. Basically, one set of investors bet that the price of GameStop stock will go down. Those investors became very greedy and dumped tons of resources into their bet. So much so that there is now a limited number of available GameStop shares to bet the other direction. Due to market mechanisms, those investors who bet on the stock price going down actually need to buy the stock to “close their positions” and realize their profits.
But because availability of shares of the stock are so limited, (because so many investors have already bet the downside) any major purchases of the stock cause major price action to the upside. This is a hugely reductive explanation, and is only a theory.
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