You are not wrong, but you are also missing the part where risk management departments will forcibly unwind shorts of institutional investors, option gamma creating massive amounts of reflexivity and the Weaponized autism of /r/WSB and the viral network effects of its memes encouraging even more reflexivity.

I have no doubt this will end in tears for investors on both sides.

GME's management would be wise to issue 1-200% of new equity at a substantial discount to present market value to short holders (this lets them cover at a lower loss) and sit on the cash to transform their businesses strategic outlook.