We want to share a note about the recent volatility in the stock market. It’s as important as ever to make informed decisions when investing. You can continue to trade on our platform, and here’s some background on what’s happened over the past weeks.
Headlines are filled with the term #shortsqueeze—we want to explain what this means and how a short squeeze works. #stocks #GME 
A “short” is when an investor believes a stock price will go down, so they “borrow” stock, sell it at today’s price, then buy it back in the future at a lower price in order to return the borrowed stock. With some stocks, “short selling” can become more common than normal trading
The “squeeze” happens when an investor who has shorted a stock observes that the stock price rises instead of dropping. Now they need to buy shares of the more expensive stock to return the shares they borrowed.
Short selling is commonly used by hedge funds and other large investors, whose investments can be sizable. And these trades are published publicly.
The general consensus is that users on Reddit’s r/WSB group noticed heavy short selling of $GME, and decided to raise the price by buying and holding stock, essentially forcing the hand of these large investors to buy back their borrowed stock at the new, higher price.
Getting into a “squeeze” is always a risk when short selling a stock, but the last few weeks’ activity have made this risk even greater. Check out SoFi Learn to get more more of the basics about investing. sofi.com/learn/
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