Is Tesla suffering the effects of a short squeeze? A short squeeze happens when a stock or asset bounces sharply higher, forcing investors who had bet that its price would fall, to buy it in order to anticipate even greater losses. And their struggle to buy, only contributes to the upward pressure on the stock's price. That, precisely is what happened to Volkswagen on 2008, when for a briefly moment became the most valuable company of the world only to crash then 95% of its recent value. However, Tesla has long had the rep of a cult stock, which is believed to this days to be the heart behind their stock astonishing rally. But this may not be its real cause. While Tesla stock soared 340% in the past year, its short interest fell three times. That means short sellers were forced to buy tens of millions of Tesla shares during this past year.