5 Biggest Short Squeezes of All Time

1. Volkswagen AG (OTC: VWAGY)

Volkswagen AG (OTC: VWAGY) and Porsche were involved in perhaps the most famous short squeezes of all time in the middle of the 2008 financial crisis. The two carmakers had a history going back over seven decades. In the early 2000s, Wendelin Wiedeking, the chief of Porsche, signaled his intent to take over Volkswagen. His stake in the firm soon reached 35%. The shares of Volkswagen were classed into two categories, ordinary and preference. Hedge funds noticed the disparity in prices between the two classes, taking up positions on them. 

Soon, Porsche announced that it had acquired a more than 74% stake in Volkswagen AG (OTC: VWAGY). The state of Lower Saxony already owned more than 20% of the firm, making the short-sellers panic as it meant not all short-sellers could hope to cover their positions on the stock. As chaos ensued, the share price of the carmaker climbed to a high of €999 for a brief period, making Volkswagen AG (OTC: VWAGY) one of the largest companies in the world for a brief stint. 

However, the share price fell soon afterwards. Volkswagen AG (OTC: VWAGY) eventually hit record lows as environmental scandals hit the firm in late 2018. It is estimated that hedge funds lost close to $30 billion on the Volkswagen AG (OTC: VWAGY) bet. Porsche, the apparent winner, did not come out strong after the ordeal, as debt and declining car sales hit the business, and was ironically bailed out by Volkswagen AG (OTC: VWAGY) in the coming months 

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