Glossary

Short squeeze

When a large number of short sellers target the same stock, the price can rise in a self-perpetuating circle known as a 'short squeeze'.

Short selling is when an investor bets that a stock will go down in price. The investor borrows the stock from a large holder, sells it, and plans to buy it back cheaper and return it when the stock has dropped in price, pocketing the difference as profit.

When a large number of short sellers target the same stock and there is a price rise or a multiple lender calls in all its shares in the stock at once, the short sellers have to buy the shares back to cover their positions and avoid greater losses.

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Their sudden high level of demand forces the share price to rise suddenly and dramatically. This self-perpetuating circle is known as a 'short squeeze'.

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