My own attempt at explaining the GameStop thing:

Imagine you borrow a friend’s bike, and promise to give it back in a week.

Secretly, you expect the same bike to be discounted soon, so you immediately sell the bike, planning to re-buy one later and pocket the difference in cash

By the way, you’re a wealthy hedge fund, and the bike is shares in GameStop.

You’ve been doing this pretty effectively for a long time, selling things you don’t own and then re-buying them later at a discount just before you have to give them back.

But this time it’s going to be different because of those pesky kids from next door (Reddit).

They saw you taking possession of your friend’s bike, and know what you plan to do next. So they tell their friends, and all start buying that model of bike.

The bike shops notice the increased demand, and hastily put away the discount stickers they’d been planning to put on. In fact, they decide to up the price, since they’re selling so well.

This is a problem for you, with no bike, and less money than a new one now costs.

Another problem for you, is that your friend Jake has been doing the same thing as you. Fucking hell, Jake.

Even more annoyingly for you, Jake has been spooked and decides to cut his losses and buy a bike now in case prices go up even more.

Unfortunately, Jake’s purchase pushes prices up even more, so you’d now need to spend EVEN MORE of your own money to have a bike in time for when you have to give it back. (This price escalation is the ‘short squeeze’). Do you also buy a new one, at a loss, or wait?

And that’s where we are now - bikes selling for a lot more than they are ‘worth’, largely because people want to screw over you and Jake.

Some will re-sell at the new higher price, but suspect others will end up with an overpriced bike they didn’t want and couldn’t really afford

And let’s not forget, when prices *do* start coming back down, there’s nothing stopping Jake from doing the same thing for an even bigger profit.