Short squeeze like this have happened before. The most famous probably being Volkswagen in 2008, when they briefly became the most valuable company in the world. In that case hedge fund managers lost $30 billion, and Porsche (who orchestrated it) came out with $10 billion.

https://moxreports.com/vw-infinity-squeeze/

It's looking like GME is going to be similar, but at some point it'll basically come crashing down once all the shorts cover and such.