2021-02-11 — scheerpost.com
``"Naked" short-selling involves selling stock without borrowing it. Naked short-selling is illegal, but the regulation is not well enforced; and in this case short-sellers had sold 40% more GameStop shares than were in existence. That made the short sellers extremely vulnerable to a "short squeeze." WallStreetBets, a Reddit social media forum that then had 2.7 million members (a number that has since risen to about 8 million) called the shorters' bluff and bought furiously, using a game-like trading app called "Robinhood." The hedge funds had to buy the shares back to cover at the new price, further driving the stock up; and other players, seeing the action, jumped in. This is what is known as a "short squeeze" -- driving the shorters to buy before the stock is out of reach. The WallStreetBets short squeeze drove the GameStop stock price up nearly 900% in five days, to around $380 on January 27. The 52-week low before that was $2.57.''
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