GameStop Short Squeeze Explained

So what happened to GameStop? In January of this year, social news website Reddit triggered a buying spree aimed to short squeeze hedge funds that had large positions in GameStop. Price went from 17 to almost $500 per share. It was crazy. It wasn't worth $500 per share. So short squeeze occurs when a shortest stock suddenly jumps in value, forcing the short sellers to buy back their positions to stem potential losses. It's a risk management thing. They've got to do it. Otherwise the firm could end. Right. Purchases are, you know, cause this death spiral because the purchases themselves cause even further right now, some funds had to be bailed out with capital infusions to stay afloat. Volatility caused extreme profits for buyers and losses for sellers. Day traders, however, also cashed in big time just from the volatility. Many day traders made millions on this popular trading platform. Robinhood halted purchases of GameStop. Very controversial. They faced major regulatory scrutiny for it and there's actually class action lawsuits on for doing so. There's also a lot of regulatory scrutiny as a result of volatility and potential manipulation. Now a contributing factor to the increased buy, including anger at hedge funds. Right. The general anger out there at hedge funds from some retail investors who basically wanted to punish the short sellers. And this is a way to do it. And it worked. The price has to come back down. Has already, has now come way back down to much more reasonable levels. Its true value. And it's too soon to tell if this pattern of behavior is repeatable, although it did happen shortly thereafter with AMC Networks, but on a much smaller scale. It's really too soon to know whether there's going to be a regulatory response or how the industry's going to react to this in general. But it's a really great classic example of a short squeeze.