3 Things Investors Need to Know About Short Squeezes
Wall Street is off to a great start in 2021, including some stocks that were under heavy scrutiny coming into this year. Investors have noticed, and are looking to climb aboard stocks they think are poised to defy critics and rocket higher.
Fueling a lot of the excitement is GameStop (NYSE: GME), which surged 100% in two days in mid-January despite difficult business conditions and a lot of investors betting the stock would go down. GameStop continued to surge higher on Jan. 25, gaining 50% in premarket trading alone.
The number of people betting the stock would go down actually helps explain some of that remarkable gain, causing a so-called "short squeeze." The conditions are right for it to happen again, and send some other stock soaring higher. But investors need to be careful before they invest based on a belief it will occur with a particular stock.
Source Fool.com
