Rational/efficient markets don't mean no irrational players. It just means that those players get punished for their irrationality, which is exactly what happened here. If anything efficient markets hypothesis is based on the fact that low/bad information is penalized which in turn makes markets more efficient ;)

Technically everyone can be rational if their utility curve is optimized by buying the wrong zoom

Yep! I think Matt Levine talked about that recently. Though to be honest, speculating on an almost "fake" stock isn't exactly rational (from the perspective of an individual market participant) because there is no way to even try to optimize the utility curve.

Unless you find it fun to gamble. Risk seeking utility curve

Ah! But we already have SPY options if you want your fix of purely degenerate gambling. I won't disagree that it's super fun! ;)

Some of my professors would include tesla in that list haha. To each their own!

I don't know. The purported rational market (which I don't really believe in) would have corrected this problem by selling shorts, among other things. However such trading IRL would have turned out to be a really bad idea because of just what has happened. So it's plausible that knowledge of the non-freeness of the market prevented an efficient price from being reached for this security.

Would it have been rational to be short though? If people confused it for the real thing before you shorted the stock, why would one assume people won't keep making that mistake? It is obvious that anyone who buys the wrong stock because of the ticker has low or no information about the stock so what could make that change? So even if the current investors realize their mistake, there's no reason to believe more badly informed played won't keep buying.

Shorting a stock is only profitable if it has at least some informed shareholders that will react rationally when confronted with negative changes by selling their stakes. On the other hand, shorting a stock inherently full of irrational players and speculators trying to profit from them is contradictory, because you are betting on (deeply) irrational players being rational.

The way this usually works is someone buys a really large short position at a good price and then publicizes true information that convinces at least some long traders to sell their positions.

There's also some question to me how much liquidity there is here. Their volume isn't tiny (at least according to Yahoo Finance) but I don't actually know how many shares are trading hands. There might not be a deep enough book to make it worth making the trades.

Yep but that's my point! Odds are, if you can't even bother checking if you are buying the right stock beyond looking at the ticker, you won't know about a short seller publicly announcing it's short position.