Meme stocks refer to a select few stocks that gain sudden popularity on the internet and lead to sky-high prices and unusually high trading volume. While some Reddit traders were able to make a lot of money in a short amount of time by buying and then selling AMC and/or GameStop at the exact right moment, investing in meme stocks is generally very risky. Meme stocks became all the rage among retail investors during the COVID-19 pandemic. Meme stocks are created when a company’s shares catch fire with individual investors on social media platforms such as Reddit and quickly skyrocket in price. But, as many traditional investors and analysts point out, these viral stocks can be very risky since they rely on high interest from small investors to sustain the stock prices’ liftoff “to the moon.” Internet hype-men continue to have influence over how investors act.
- Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues.
- It seems vague, but that is because meme stocks have encompassed various companies over the last year.
- 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.
- Owning one can be anxiety-provoking, too, as you watch the stock price zoom up and then plummet.
Can I make money with a meme stock?
Meme stocks are stocks with a compelling narrative that are hyped up and popularized by retail investors on social media platforms. The narratives generally revolve around a turnaround story and/or an undervalued business coupled with a high short interest. In late 2021, Roundhill Investments launched the Roundhill Meme Stock ETF.
A meme is an idea or element of popular culture that spreads and multiplies across people’s minds. Memes gained prevalence and relevance as the internet and social media grew. They allow people to rapidly spread humorous, interesting, or sarcastic videos, images, or posts around the world. The rapid and multiplicative effect of sharing such posts can make them go viral. Meme stocks are shares of companies around which online communities have formed to promote and build narratives. In short, while meme coins may operate in the open, many exist in a regulatory twilight zone—too unserious to be securities, yet too consequential to ignore.
Are Meme Stocks Real Investments?
She’s helped a range of SaaS why the biggest bitcoin mines are in china platforms and tech companies share their stories, and has written for the Mortgage and Finance Association of Australia magazine, MYOB Pulse, Anthill Magazine, Crypto News Australia and The Chainsaw. In early 2025, the world saw news that could only happen in the modern meme-driven economy. A meme cryptocurrency bearing the name and likeness of a US president skyrocketed overnight—and crashed soon thereafter. They can completely throw off both your fundamental and technical analysis.
With minimal oversight, it’s easy for developers to hype up a new token, attract buyers and then disappear—it’s what’s called a “rug pull”. Some celebrity-endorsed crypto coins have ended in lawsuits or regulatory investigations after investors were left holding worthless tokens. The very first meme coin was Dogecoin, created in December 2013 by software engineers Billy Markus and Jackson Palmer as a tongue-in-cheek parody of the crypto craze. They emblazoned it with the iconic Doge meme—that universally recognised image of the smiling shiba inu—to ensure that everyone knew it was a joke. Much to the founders’ surprise, Dogecoin gained traction and built a loyal online community who seemed to like its friendly, ridiculous premise.
Compare investing resources
For most investors, especially those who value stability, meme coins are better left as curiosities, and not the foundation of a serious investment plan. Trumpcoin is in the news again, after organisers announced that the top holders of the Trump cryptocurrency were going to receive invitations to a dinner attended by the president. After a new frenzy that drove prices up, investors started selling off their holdings once more.
One of the more interesting modern mainstream meme stocks is Robinhood itself, which disproves the notion that the price rises of meme stocks are entirely without concrete merit. A meme stock is widely considered to be a stock of a company that has gained significant traction with one internet community or another. The origins of the official meme stocks can be traced down to the summer of 2020 when people were becoming increasingly bored by the restrictions imposed due to the COVID-19 pandemic. These short sellers will borrow shares against the stock and attempt to buy them back at a lower price.
The platform should tell you how many shares this will purchase, and what you’ll be charged in fees. Once the account is opened and funded, and you’ve settled on an investment strategy, you can buy shares. It also means that, rather than waiting to build up a lump sum, investors’ money can gain market exposure right away. First, we provide paid placements to advertisers to present their offers.
In giving you information about financial or credit products, Forbes Advisor is not making any suggestion or recommendation to you about a particular product. It is important to check any product information directly with the provider. Consider the Product Disclosure Statement (PDS), Target Market Determination (TMD) and other applicable product documentation before making a decision alpari review to purchase, acquire, invest in or apply for a financial or credit product. Contact the product issuer directly for a copy of the PDS, TMD and other documentation. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved or otherwise endorsed by our partners.
STOCK TRADING SERVICE
This demonstrated the collective power of retail investors, and led to the coining of the term ‘meme stock’. These posts didn’t make any recommendations or indications about GME or any other stocks but they reignited frenzied interest in meme stocks, causing a massive surge in trading volume and price. GameStop shares skyrocketed nearly 100% on Tuesday, May 14, 2024 following a 74% increase the previous day.
- Short selling occurs when someone sells shares that they don’t own, hoping to buy them back at a lower price.
- The platform should tell you how many shares this will purchase, and what you’ll be charged in fees.
- This kind of trading is ultimately not that much different than gambling.
- Though the idea of amassing crazy wealth overnight is obviously appealing, the reality is that the odds are heavily stacked against anyone trying to outsmart the market.
- We could charge more, but we have a pay it forward, give back mentality.
This is known as a short squeeze and it accelerates a stock’s price increases as more and more short sellers are forced to bail out to cut their losses. One of the features of meme stocks, especially early on, has been that they tend to be heavily shorted names. There’s a lot of short interest in the What is Ripple stock or a large proportion of the company’s outstanding shares have been sold short.
Which Meme Stocks Predate GameStop? 🕰
If your goal is to buy a house, save for retirement, or otherwise increase your financial security, you might consider a fundamentals-based investing strategy that isn’t guided by Reddit, TikTok, or any other media platform. If you’re not interested in building and managing your own portfolio of meme stocks but still want some exposure to the movement, there are some ETF solutions to help. One example is the VanEck Social Sentiment ETF (BUZZ -0.55%), an actively managed portfolio of 75 stocks that rank high in social media conversations. Top holdings in the portfolio include Robinhood Markets, Microstrategy (MSTR 0.72%), and Palantir. This ETF has an annual expense ratio of 0.75% (meaning it costs $7.50 per year for every $1,000 invested). If you’re thinking about buying and selling meme stocks, keep in mind that you will probably have to pay taxes on your profits.
This rapid price appreciation caught short sellers off guard, resulting in significant losses estimated at over $1.3 billion in just the two days following Gill’s tweets. As a result, short sellers were forced to choose between buying the stocks back at increased prices or waiting out a fall in price. The resulting millions lost by marquee-name banks and hedge funds immediately drew scrutiny to the phenomenon of meme stock trading. You’re probably familiar with memes—bits of cultural info spread by imitation—but what about meme stocks? A meme stock is one whose share price is being driven by Internet culture. As a concept, they’ve only been around for a few years, but meme stocks have caused plenty of excitement—and, at times, pain—for active traders and everyday investors who get caught up in the frenzy.
GameStop was the first successful meme stock but it wasn’t the only one. WallStreetBets users quickly identified other downtrodden stocks with heavy short interest to boost. These included AMC Entertainment Holdings Inc. (AMC), the movie theater chain that saw flagging profits amid the COVID-19 pandemic and Blackberry Limited (BB), the outmoded smartphone maker. GameStop shares drifted steadily lower after the initial meme stock craze, settling at around $10 a share by the spring of 2024. Online interest in ‘stonks’ among retail investors often, but not always, correlates with high levels of short interest among institutional investors.
A meme stock is any publicly traded stock with a price performance that’s strongly influenced by activity on social media. Both prices and trading volumes of meme stocks may be exceptionally volatile, as the hype on platforms like Reddit can cause spikes in demand. The price performance of meme stocks is generally not based on changes in the underlying company’s fundamentals or financial performance.
