Short Squeeze

A rapid price increase that occurs when a heavily shorted stock begins to rise, forcing short sellers to buy shares to cover their positions, which in turn drives the price even higher in a self-reinforcing feedback loop. The GameStop squeeze of January 2021 is the most famous modern example, with the stock surging from around $20 to nearly $500 in days, inflicting billions in losses on short-selling hedge funds. Short squeezes tend to be violent and short-lived, with prices often collapsing once the covering pressure subsides.