it doesn’t just magically stay high forever after the shorts are covered.
same cascading down effect can happen if gamestop simply issues new shares
even now there’s people on reddit who said they FOMOd in at 150 price point
Also, there are several positive externalities to a rally. Stock price is something of a self-fulfilling prophecy, partially because companies can issue shares to raise money -- or use shares to buy another company. In some cases, a rally could lead a convertible bondholder to exercise and sell shares, effectively reducing the firm's debt.
Even if this rally were to be short lived, short-sellers are unlikely to feel as comfortable selling the stock short in the future, and thus unlikely to impact the stock downward.
There is room for profit-taking at every cost basis except for the very top - looking at that subreddit, there are no illusions that it will literally last forever, only that selling en masse now (when shorts are actively working together to fight back) undermines the squeeze.
The real concern I have is the millions of people who blindly trust a financial advisor fresh out of college, who has never made a profitable trade in their life. We've all been told to buy into indexes and that we can retire rich. What happens when the market doesn't grow for 10 years? Why should the market continue to grow if the US loses its economic superiority and population growth in the US slows?
At the end of the day, a share of a single stock is only worth what someone else will pay for it. The company or business behind a share does not matter for the average retail investor, since by owning shares they really don't control much of anything. This particular WSB saga is a bunch of people trying to force some hedge funds to pay them more money for their shares than they are worth. It is as simple as that.