A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock’s price.
Tesla is America’s most hated (shorted) stock. … The dollar value of all shorted Tesla shares is close to hitting $20 billion. No US stock in history has ever been that shorted.
The sheer magnitude of short sellers put Tesla at risk of being caught in a short squeeze of historic proportions. And one likely was triggered at the end of last year…. On October 23 2019, Tesla reported a profitable quarter, blowing away analysts who expected losses. In the next two days, Tesla stock popped 31%—which likely triggered a chain of short squeezes that exist to this day.
TL;DR short sellers are forced to buy at the same time by any price.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.
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