My understanding of the GameStop situation is that the stock's value had already diverged from the underlying value of the company, and the meme stock crowd noticed that and took advantage of it. Specifically, they saw that there were more short positions than total shares of existing stock, so they bought shares, thus causing a short squeeze. (This is possible because there's a power imbalance between the people who short a stock and the people who are long.)

The meme stock crowd didn't create the value/price imbalance (it was created by the short sellers), they just saw that it was already off and took advantage of the situation, so then the value imbalance swung the other way. And in the end GameStop as a company survived and are now doing pretty well as far as I'm aware. GME is trading at about $100 a share, which is a lot better than about $4 a share a couple years ago. Maybe that's an artificially inflated price, but who cares? As far as I can tell that's just the normal market consequence of too many people shorting a stock and someone calling their bluff.

No not really.

Its a lot of hard cash moving stock prices around without hedging, and that's before the secondary effect of algorithms amplification.