Wikipedia defines a short squeeze as a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock.
Short squeezes result when short sellers seek to cover, or are forced to cover, their short positions, either because they can no longer borrow stock or they cannot, or prefer not to, cover margin calls.
Investors should be aware of the nature of short squeezes and act accordingly.
Recent market action in the shares of Beyond Meat is suggestive of a short squeeze.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA