How a Short Squeeze Catapulted, Then Crushed, Then Again Catapulted GameStop
The recent surge of huge price swings in shares of GameStop (NYSE: GME) has been nothing less than mesmerizing. GameStop's stock soared nearly 700% in just five trading days as of the middle of last week, only to plunge 44% one day later. Then on Friday, GME shares rebounded to rally more than 50% on that day alone. AMC Entertainment's (NYSE: AMC) stock jumped 300% last Wednesday, fell more than 50% on Thursday, and jumped more than 50% again on the final trading day of last week.
The underlying reason? Investors believe they have identified a misstep a few fund managers made. Specifically, this crowd of individual investors collectively forced these funds to buy the stock by creating what's called a "short squeeze."
The price volatility that was on display last week (and has continued into this week) is worth a closer look for a couple of reasons, not the least of which is the fact that this sort of price speculation is something most investors shouldn't even attempt.
Source Fool.com
