Short squeezes were a sensation a couple of years ago. Beaten-down stocks with overwhelming short-selling became lottery tickets that exploded for massive investment returns in a matter of days, sometimes hours. The stock-trading fun fizzled out in 2022 when the bear market turned market sentiment negative. However, the constant doom and gloom may have set the stage for a short-squeeze resurgence. Some stocks have been shorted so heavily that they've fallen as much as 95% from their highs.

Some of these stocks began getting squeezed in May, posting rapid gains ranging from 78% to 250% in weeks. Here is what you need to know about short squeezes (hint: they're extremely risky) and which stocks could continue popping off over the weeks ahead.

Typically, most investors buy stocks because they think the share price will go higher over time, making them long-term investors. Shorting a stock is the opposite side of that concept; someone shorts a stock because they think the price will fall. Short-selling is when someone borrows shares of stock to sell them. Shorting a stock creates the obligation to repay those shares in the future, a crucial point.

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Source Fool.com