| How is this a classic pump and dump ? This is a short squeeze: the stock is shorted to the limit, and from the stock price, the shorters entered their positions "uncovered", so their risk is extremely high, and their losses are potentially infinite. The WSB crowd and probably others noticed this, and bought the stock, knowing that it was going to become more valuable over time once the shorters had to close their positions. They were right, and the shorters are loosing so much money that they are willing to buy back the stock at astronomical prices to limit their losses, which drives the price up even more. The WSB crowd just need to hold until the stock is at the maximum price that the short sellers can pay, right before the short sellers default. That's the actual value of the stock right now. If the stock climbs too much, and the short sellers default, the stock is worthless. TBH, this is the short sellers own fault. They made the assumption that the market was "fair", and that they were going to buy back the shares for cheap when they needed them as a consequence. That assumption was wrong. |
In particular, I've seen a lot of speculators spreading the idea that margin calls will force everyone shorting Gamestop to buy stock at market price on Friday. This is wrong, and pretty unequivocally so, but I've had multiple friends come to me and explain that this is why they bought some.