The problem is deeper than just a lot of short selling.
On the Securities and Exchange Commission website, is a list of all shares that have "fails-to-deliver" at settlement date.
So shares that someone has paid for, but couldn't be found.
https://www.sec.gov/data/foiadocsfailsdatahtmGet the latest one, "January 2021, first half" cnsfails202101a.zip

5,074,937
For a company with only 69.75M shares, having 5M shares (7.16%) that cannot be found is odd.
Also you have this analysis
https://www.reddit.com/r/wallstreetbets/comments/l9rk78/sec_doj_60_minutes_public_data_suggests_massive/There are are 71 million shares of GME that have ever been issued by the company. Institutions have reported to the SEC via 13F filings that they own more than 102,000,000 shares (including the 13% of GME stock is owned by Ryan Cohen). That is already 30,000,000 shares more than even exist.
On top of the shares reportedly owned by institutions, retail investors may currently hold 50+ million shares (counting both long holdings and call options – both ITM and OTM).
Once you include call options, retail investors may already hold more than 100% of GME (not just 100% of the float, more than 100% of the actual company). This would be definitive proof of illegal activity at the highest levels of the financial system.
So how can this happen, more shares being held than exist ?
Simple, one or more hedge funds created counterfeit stock in GME, so it could be shorted.
Given the original plan was to bankrupt Gamestop, no one would find out when the shares became worthless.
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As for what started all this, a number of people decided Gamestop had a future, especially more recently.
1. PS5 and Xbox Series X|S consoles are selling out, when supply is no longer such an issue, Gamestop can make ever more money.
2. With new consoles, people will want to buy games and accessories to go with it, either instore or online.
3. Has a new CEO Ryan Cohen, and two other new board members.
4. Plans in motion to revamp the company online sales.
5. In the process of exiting out of some of the expensive realestate they lease.
Most recent figures I could find, it's a mixed bag
https://www.gamespot.com/articles/gamestops-holiday-sales-drop-due-to-covid-19-and-ps5-xbox-series-x-sellouts/1100-6486095/ (dated Jan 13 2021)
Total comparable store sales rose by 4.8% compared to last year
Net sales amounted to $1.77 billion, which is down 3.1 percent.
E-commerce sales jumped by 309% and made up 34% of GameStop's total sales.
GameStop said its sales across Australia and New Zealand jumped by 31 percent, and these regions outperformed GameStop's other international markets.