Because of a short squeeze. If I borrow a gamestop stock from you and sell it, then I promise to buy it back and give it back to you at a later date I am betting that the stock will go down in price. I am short GME. If you buy the stock and just hold you are long GME.

There are more people who are short GME than there are GME stocks avaible on the market (this can happen with ought-to-be-illegal naked shorting or because if I short the stock, I've sold it to someone, who in turn can borrow it out to be shorted again, ad infinitum).

If I'm long GME, all I can lose is the value of the stock. But if I am short GME, there is no theoretical limit how high GME can go, so my losses can theoretically be infinite when I have to buy it back at an infinitely high price. So you have some large hedge funds making huge bets GME will drop in price. When the stock went up; because it was kind of undervalued; they doubled down on their short position instead of taking a loss.

The people who are short GME are seeing the stock go up and they don't want to buy it back; and the people who are holding it are seeing it go up and are unwilling to sell and take a profit now (it can go up more, especially if there is short squeeze). At some point as the stock keeps going up they either get cold feet and buy it back to stop losses, or they literally go bankrupt and are forced to then buy the stock back and take the loss. The action of buying the stock back at $40 drives the stock up (some people are willing to sell at $40, some people at $50 and so on, so if you are trying to quickly buy a lot of GME the price shoots up). As the price shoots up, this forces more shorts to unwind their position and buy back stocks now to cut their losses.

A reddit forum discovered how massively overshorted this stock was and as it started shooting up. A bunch of autists piled on and drove it upwards, causing shorts to be squeezed, causing it to keep rocketing upwards. In theory they have made a lot of money at the expense of those hedge funds who were shorting, but they've only made that money when they finally sell their GME stocks; short squeezes tend to have this exponential ramp up and exponential ramp down with a narrow peak. If you buy in late (buy when it's expensive) and sell too late (when it's below what you paid) then you've obviously lost money. Stock prices are sort of fractal and you can't really time it or know if this little dip here is the end of this exponential run up in price or if it's just a dip and it will explode upwards again tomorrow. If you go full retard and buy GME at $350 which it is absolutely not worth; it can still go to $5000 or it may be right at the peak already. The only way for it to got $5000 is that there is a bigger retard willing to pay $5000 thinking it will keep going higher. Even if everyone rationally knows it's not worth that; it can be rational to irrationally pile on if you think you can get out before the price crashes again.