What Are Meme Stocks, and Are They Real Investments?

Social media users quickly found the character relatable, with some even comparing it to Brian Griffin from Family Guy. By October 2024, the meme went viral, becoming a popular way for users to express a carefree attitude. It was widely shared across platforms, with its unique charm resonating deeply with audiences.

Where should you invest $1,000 right now?

Meme stock communities pumped the brick-and-mortar retailer Bed Bath & Beyond (BBBY) to extreme levels in the summer of 2022, when it was up 314% for a short period before crashing back down. Short selling is when somebody sells shares that they do not own, hoping to buy them back at a lower price. That seller must borrow shares from somebody who is long the stock in order to sell them. As more and more shares are sold short in this way, there are fewer shares left available to borrow.

1. Meme stocks are a relatively new phenomenon, beginning in late 2020 and early 2021.
2. Once the meme stock cycle enters into the FOMO phase, it’s most likely too late to make a profit.
3. Purchasing stocks or bundles of stocks is a form of investment for many people.

It even specifies that the draught-victim would be immune from both debt repayment and interest repayment for a year. One has to imagine that this specificity was needed as folks interested in making money however they can have been around since the conception of civilization itself. Money, in the shape of a useful commodity, is multiple thousands of years old, which naturally means that laws around debt, contracts and payments are nearly as old as well. Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about. Then, log in or create an account to assign this resource in your online classroom. But the goals of meme-stock participants are not solely to make a quick buck.

Keep in mind that other fees such as regulatory fees, Premium subscription fees, commissions on trades during extended trading hours, wire transfer fees, and paper statement fees may apply to your brokerage account. For those who choose to invest in meme stocks, its a valid question to ask. Other companies that have become meme stocks to varying degrees include Plug Power (PLUG), Virgin Galactic (SPCE), Palantir (PLTR), and BlackBerry (BB).

These short-term surges can often reverse course just as quickly, though, making meme stocks far more volatile than average stock market moves. For example, when retail investors on platforms like Reddit identify heavily shorted stocks, they may coordinate buying efforts to drive the price up, triggering a short squeeze. This cascade effect can propel meme stocks to dramatic highs within a short timeframe, although these gains are often temporary. Roundhill Investments came out with a meme stock-focused ETF in December of 2021 under the ticker symbol ‘MEME’. MEME features an equal-weighted portfolio of 25 stocks based on social media popularity and market sentiment. The top 25 such firms are included in the portfolio, which is re-examined and rebalanced twice a month.

What is the main appeal of meme stocks?

Social media has introduced a new type of stock phenomenon — meme stocks. These stocks can experience extreme price swings based more on online popularity than financial fundamentals, making them volatile and often risky investments. This article explains what meme stocks are, their history, and how they may affect the market. If an investor doesn’t want to research or follow specific meme stocks, another way to get exposure to the phenomenon is by buying an exchange-traded fund (ETF) that holds companies popular on brokerage platforms. In January 2021, Investors on the Reddit forum “r/wallstreetbets” banded together and triggered a short squeeze in GameStop Corp., a popular short among hedge funds.

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. For many people, memes are more than just jokes—they’re a way to express feelings and experiences top trend trading strategies to increase profit in forex market in a way that’s quick and relatable.

Pros and Cons of Trading Meme Stocks

This demonstrated the collective power of retail investors, and led to the coining of the term ‘meme stock’. There is no doubt that it can be exciting to make money on day trading and to be a part of something bigger, such as in the case of the GameStop surge. And yet, studies have shown that even the most experienced of day traders lose money. So while it might be a positive thing that these meme stocks have increased interest in the stock market, in the end, experts recommend following a much more prudent investing strategy.

Shares of GameStop soared more than 110 percent in early trading Monday after What is an iceberg order 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. In addition to GameStop, examples of meme stocks include AMC, and BlackBerry.

Investors were outraged, sparking discussions about the fairness and transparency of the stock market. Investing in meme stocks may feel like a way to get something out of social media, but before you proceed any further, make sure you know the risks. Buying meme stocks isn’t investing; it’s trading, and it closely resembles gambling from multiple angles. Meme stocks lure investors with the promise of potentially big returns in little time. Bear in mind 100 pips power trend forex day trading strategy that meme stocks can be especially volatile, so plan accordingly and be prepared to continue investing more over time.

When an investor or trader is shorting a stock, it means they’re wagering that the price of the shares will fall. A short squeeze refers to rapid price gains in a stock, as traders exit their bearish positions at a loss en masse. At the time, online investors rallied together to create a massive short squeeze that befuddled traditional investors and made headlines across the globe. Late the previous year, an online community of retail investors rushed to buy shares in this struggling video game retailer – GameStop – causing its share price to surge.