Stats › Options, shorts and positioning › Short squeezes
Historic short squeezes
A short squeeze is one of the few things in markets with a genuinely mechanical explanation. Somebody has sold shares they borrowed, and at some point they have to buy them back. If the price rises far enough, that buying stops being a choice, and forced buying pushes the price higher, which forces more buying.
This page covers the two cases everyone reaches for. Volkswagen in October 2008, where a corporate disclosure left short sellers collectively owing about twice the shares available to buy. And GameStop in January 2021, where short interest exceeded the entire free float. Both are extraordinary. Only one of them is a clean squeeze, and the awkward part is that the regulator who investigated the more famous one concluded it mostly wasn't.
That disagreement is why I built the page rather than just listing prices. The SEC's staff report reached a conclusion almost nobody quotes, six named academics published a formal rebuttal, and neither of those is a fringe position. You get both here with the exact wording, and the reports themselves are linked at the bottom, so you can read the primary documents instead of the retellings of them.
In October 2008 Porsche disclosed control of 74.1% of Volkswagen's ordinary shares while about 12% had been sold short and less than 6% remained in free float. The shares went from €210.85 to over €1,000 and Volkswagen was briefly the most valuable company in the world. In January 2021 GameStop went from around $20 to a $483 intraday peak with short interest at 122.97% of float on the SEC's own data. But the SEC's staff report reached a conclusion almost nobody quotes: "it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation." Six named academics have formally disputed that.
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