Price surges in meme stocks are often driven by a combination of social media buzz, collective retail investor action, short squeezes, and media coverage. These factors can lead to rapid price spikes, but they often lack the underlying stability of traditional stocks. Meme stocks How to buy bittorrent coin rose to prominence in early 2021 when online communities of retail investors, especially on platforms like Reddit, drove up the prices of heavily shorted stocks like GameStop and AMC.
- Remember that these risks and rewards generally impact the retail investor segment (aka anyone who trades as an individual investor in the general public).
- Gill and activist investor Ryan Cohen were key figures in motivating a community of online traders from the WallStreetBets subreddit to buy and hold shares of GameStop, running up their price.
- It’s also beneficial for cancer patients with low or unhealthy T-cells.
- Shares are worth what people are willing to pay for them (aka market value).
Is the Meme Stock Craze Over?
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Meme stocks are closer to penny stocks than blue-chip stocks and don’t pay dividends. However, that victory was short-lived as meme stocks deflated as quickly as they inflated during the bear market 2022. As the smoke clears and the stock market recovers in 2023, retail traders wonder what the next meme stock will be that spawns another meme stock mania. Past performance of investment products does not guarantee future results. The responsiveness of the trading system may vary due to market conditions, system performance, and other factors.
By closing two days later, the value doubled; an 8x increase from the price at the time of Cohen’s and Gill’s previous posts. Oftentimes, meme stocks boil down to a particular influencer (like RoaringKitty on YouTube, who spearheaded the GME movement) or community (like the previously mentioned WallStreetBets). Other companies that have become meme stocks to varying degrees include Plug Power (PLUG), Virgin Galactic (SPCE), Palantir (PLTR), and BlackBerry (BB). There are also YouTube content creators, Facebook communities, Twitter hashtags, and even Discord chats propelling these meme stocks into fame. Let’s cover how meme stocks work, what to look for in the next meme stock, and how companies like AMC and GameStop got to where they are today.
Investing in meme stocks and ETFs
They are often now trading below where they started before the meme frenzy. Others, notably GameStop, remain elevated, although still far lower than its all-time highs. Ultimately, a short seller may run out of available funds to hold on to the short and will be forced to buy back the shares at a higher price and close out the position. If many shorts are forced to cover at once, it adds additional upward pressure on the stock’s price as they are all forced to buy the stock and cover at ever higher prices.
What Are Meme Stocks and Are They Worth the Investment?
However, in mid-May of that year, the what is a forex spread the complete explanation stock experienced a sudden resurgence, fueled by the return of Keith Gill, aka “Roaring Kitty,” to social media. To borrow a quote from a famous Supreme Court justice, it’s something you’ll know when you see it. Meme stocks aren’t a specific sector or stock type, but a loosely-tied group of securities paraded about by social media influencers, retail investors, and pot-stirring CEOs.
GameStop followed suit in 2021, raising nearly $1.7 billion via a secondary offering of 8.5 million additional shares at an average price of more than $200 per share. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Theres a social sentiment indicator in the stock market that helps investors determine how a particular company is performing in terms of popularity. The indicator requires data from social media and businesses to build the charts. Shares of GameStop soared more than 110 percent in early trading Monday after Keith Gill, who goes by Roaring Kitty on social media sites X and YouTube, posted for the first time in three years. Shares of other popular “meme stocks” such as movie theater chain AMC Entertainment were also higher, harkening back to the frenzied pandemic trading of 2020 and 2021. If you’re an investor looking for a longer-term holding (think years rather than days, weeks, or months), there are some important factors to consider before buying a meme stock.