Short squeeze
A sudden, sharp price rise because short sellers have to buy back their positions in a hurry.
In short
As of 8 October 2026A short squeeze is a sudden, sharp rise in a stock's price because short sellers have to buy back their positions in a hurry. Their purchases push the price even higher. Stocks with a small free float and heavy short selling are most prone. The rise can collapse just as quickly; a well-known example is GameStop in 2021.
If many investors have shorted a stock through short selling and the price suddenly rises, they come under pressure. To avoid bigger losses, they buy back. These purchases push the price up further, forcing even more short sellers to buy back.
Stocks with a small free float and a high short interest are especially prone. The rise often has little to do with the company's value and can collapse just as fast. Late buyers risk heavy losses. High volatility is typical.
Example: the US stock GameStop rose many times over within a few days in January 2021, fuelled by retail investors in online forums. Soon afterwards it fell sharply again. Be careful with such hype, see our scam check.
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As of 8 October 2026 · Educational content, not investment or tax advice.