That's not what market efficiency means. Market efficiency is specifically a function of liquidity and price discovery. A market is more efficient when the pric

That's not what market efficiency means. Market efficiency is specifically a function of liquidity and price discovery. A market is more efficient when the price of assets is derived from some measure of intrinsic value. Technical factors emergent in trading mechanics (such as what causes a short squeeze) do not have intrinsic value. Obviously you can can extract value from them in the short term, but that is not the same thing as market efficiency. When you trade on technical factors like a short squeeze, your orders do not enhance a directional view of the asset or the liquidity of the asset. This is to say that not everything which is profitable is enhancing market efficiency. Generally speaking: long/short strategies are preoccupied with price discovery and valuation, systematic momentum, trend and volatility strategies are concerned with arbitrage, and market makers are concerned with liquidity. These three exist on a spectrum between enhancing price discovery and enhancing liquidity. There isn't really anything inefficient about shorting too much - if that happens, it means there's widespread consensus the asset is overvalued, which is likewise a statement that there should be less of the asset at that value. The valuation and liquidity have a feedback cycle here. In the case of GME, a directional view that could contribute to price discovery would be that GME should actually be valued on future revenues which are mispriced by the market due to a variety of factors (e.g. Ryan Cohen, digital-first transformation, etc). It would still be generous and optimistic, but it would at least be a coherent directional thesis. The process of market efficiency would be to incorporate this view when you stake with an open position, and theoretically if you're right your view will be vindicated. There is nothing efficient about GME at $100, let alone $400.