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A short squeeze occurs when investors who shorted the stock are forced to buy shares to cover their positions, pushing prices even higher. This phenomenon resulted in extreme market volatility, prompting brokerage firms worldwide to impose trading restrictions to curb speculation.
When the frenzy subsided, the prices collapsed, leading to significant losses for many retail investors. Other meme stocks like AMC, BlackBerry, and Bed Bath & Beyond also experienced similar volatile swings, with some companies ultimately facing delisting or bankruptcy, exemplified by Bed Bath & Beyond's shares becoming worthless after being delisted.
Aftermath of the Meme Stock Craze
The aftermath of these episodes revealed harsh realities: