What happened Shares of many highly shorted stocks rose sharply on Wednesday, as traders bid up their prices in hopes of igniting short squeezes. Here are some of the day's top gainers: Genius Brands (NASDAQ: GNUS), up 81% Eastman Kodak (NYSE: KODK), up 28% Palantir Technologies (NYSE: PLTR), up 10% Virgin Galactic (NYSE: SPCE), up 10% So what A short squeeze can occur when short-sellers suffer sizable losses on a fast-rising stock. To short a stock, a short-seller borrows its shares from another investor and sells them, with the goal of buying them back at a lower price and harvesting a profit. When traders squeeze short-sellers, they essentially bid up a stock's price to force them to close their short positions, which requires that they buy back the shares they sold short. This forced selling on the part of short-sellers can turbocharge a rally in a heavily shorted stock's price. The bulls are trying to force the bears out of their short positions in many battleground stocks. Image source: Getty Images. In recent days, traders have used social media sites like Reddit and Twitter to spur other investors to buy shares of many stocks with high levels of short interest. They've found success in driving up the prices of stocks like AMC Entertainment and GameStop. Now, they appear to be attempting to do the same with Virgin Galactic, Palantir, Genius Brands, and Kodak, among other highly shorted stocks. Now what Investors should note that short squeezes are not inevitable. The recent rallies in many heavily shorted stocks could fizzle out, and their prices could quickly reverse course. That could lead to large losses for traders who buy at today's inflated prices. 10 stocks we like better than Virgin Galactic Holdings IncWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Virgin Galactic Holdings Inc wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of November 20, 2020 Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter and Virgin Galactic Holdings Inc. The Motley Fool owns shares of Palantir Technologies Inc. The Motley Fool has a disclosure policy.Source