• In the years preceding 2021, GameStop was a struggling company that was often viewed as likely heading towards bankruptcy
• Keith Gill, known on YouTube as RoaringKitty, and on Reddit as DeepFuckingValue, began investing in GME in 2019, and shared his investing thesis and position on these social media platforms
• In the second half of 2020, Ryan Cohen began purchasing shares of GME, becoming the largest owner of GME with approximately 13% ownership of the company at the time
• As the share price of GME began rising in the second half of 2020, GME started to gain attention on social media platforms, causing more investors to purchase shares of GME, causing the price to continue to go up, in a continuous feedback loop
• In January 2021, the share price of GME was rising exponentially
• On January 28, 2021, in an unprecedented maneuver, most stock brokers, in unison, disabled the ability for investors to purchase shares of GME
• According to the SEC Staff Report on Equity and Options Market Structure Conditions in Early 2021 , "it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock."
• In June 2022, the U.S. House Committee on Financial Services published the report Game Stopped: How the Meme Stock Market Event Exposed Troubling Business Practices, Inadqueate Risk Management, and the Need for Legislative and Regulatory Reform
  • As a multitude of financial institutions faced untenable risk, "several stock trading platforms restricted trading on meme stocks as an emergency risk management tactic"
  • "These restrictions and outages placed downward pressure on meme stocks."
• In September 2023, the movie Dumb Money was released, providing a dramatized story of this peculiar stock market event

Were the events of January 2021 a short squeeze?

Various sources, and ultimately the commonly found consensus is that in January 2021, there was definitively a short squeeze of GME. That, the thing that happened to GME was a short squeeze, it was an event in history that happened, those parties that held a GME short position got squoze, then it ended and it was all over.

For example, the Wikipedia article GameStop short squeeze plainly asserts that a short squeeze took place. The investopedia.com article short squeeze has a section about the "GameStop short squeeze," and also asserts plainly that such an event did happen.

In cases like this, the implication is that the events of January 2021 pertaining to GME amount now to a historical episode that happened, then it ended, and now it is over. Yet, oftentimes, like in both of the information sources provided above, the magnitude of the situation is downplayed, and the severity of the actions taken is glossed over, such as when a multitude of market participants acting in unison to turn off the buy button for GME and other stocks. The action of disabling purchasing of stock for several days across most major stock brokerages provided a major break and advantage for those that were positioned short on GME. It was an unprecedented maneuver in response to a dramatic situation.

GME shareholders often assert that shorts never closed. This view is based on the belief that short sellers opened GME short positions years prior to the run in January 2021. In those earlier times, the share price of GME was so low compared to the prices during and after the sneeze, that those parties holding that short position could not afford to close their short position, and therefore never did.

On January 27, 2021, CNBC ran an article stating that Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position . CNBC curiously even ran ads on Twitter and likely elsewhere, announcing this breaking news. If any hedge fund made a significant move one way or the other in a situation like this, why would they go to the media and announce it to the world? And why would the media run ads to further promote this announcement?

On February 2, 2021, Mark Cuban went to the r/WallStreetBets subreddit to have an AMA discussion about GME. In this conversation, Mark stated: "Their goal is to never cover their short. But that would take the company going out of business or being delisted. That wont happen here." This conversation with Mark Cuban further solidified in the minds of some GME investors the notion that shorts never closed.

Further evidence that shorts did not close can be inferred from FTD data which remains curiously elevated.

In conclusion, many GME shareholders hold the view that GME did not have a proper short squeeze of GME in January 2021, because the episode was prematurely interrupted when the market participants prevented further purchasing of GME shares, to the advantage of those market participants that held a GME short position. Furthermore, it is speculatively believed, though difficult to prove, that there are participants that have a GME short position that remains open that must eventually be closed. For this reason, this event is often referred to as the GME "sneeze" by GME shareholders, and not a short squeeze; that the real squeeze is an event yet to come.