These stocks often gain popularity and attention from individual investors, driven by online communities and platforms such as Reddit or X. The term meme stock comes from the idea that these stocks are propelled by memes and jokes rather than traditional fundamental analysis or market factors. The stock market has traditionally been a serious and complex arena, with investors analyzing financial statements and market trends to make informed decisions. But the rise of social media and online communities has brought about a new phenomenon known as meme stocks. These stocks are often driven by online communities and viral trends rather than traditional fundamentals. While they may seem like risky and speculative investments, meme stocks have gained a cultlike following and caused major disruptions in the market.
Vanda analysts wrote that they believe the most likely path could be that a number of hedge funds participate in a short squeeze of meme stocks, and exit their positions before the waves of retail traders sell their shares. That could mean the latest surge in stocks such GameStop and AMC could be shorter and reach less dramatic heights than in 2021. Social media activity is the main driver of the prices and trading volumes of meme stocks, noted Britannica Money. “The hype of meme stocks is generally not based on changes in the underlying company’s fundamentals of financial performance,” wrote Britannica Money, but in messages on social media. Simply put, meme stocks skyrocket in price in a short period (often hours or days) because of a sudden surge in interest online or on social media and subsequent buying among small individual investors. These short-term surges can often reverse course just as quickly, though, making meme stocks far more volatile than average stock market moves.
- ” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity.
- We can’t really argue this notion when it comes to GME, AMC, and similar crazes, but don’t believe it is definitively true when we look at the broader relation between memes and the market.
- Sports betting expansion continues across more states each year, and DKNG has positioned itself as a leading brand and industry leader.
- These short-term surges can often reverse course just as quickly, though, making meme stocks far more volatile than average stock market moves.
It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. This resurgence is tied to the broader recovery in the cryptocurrency market, fueled by increasing institutional interest and favorable regulatory signals. With Bitcoin prices showing strong momentum heading into 2025, RIOT is positioned to benefit from both rising crypto valuations and its diversified business model in the mining sector. Vanda also noted many hedge funds have learned from 2021 and are likely better prepared for short squeezes today. And David Trainer, CEO of investment research firm New Constructs says a “pump-and-dump scheme” is a fair way to characterize what’s going on here.
Market Overview
As a result, WIF is still one of the top 10 meme coins by market cap. The incredible surge of GME stock last year, which took its shares from around $4 in mid-2020 to more than $480 per share in January 2021, was one of the most incredible near-term short squeezes I’ve ever seen. When meme stocks came into the public eye, they developed a slang of their own. We’ll briefly go over the most common, and important words of this newspeak.
Investing in low-cost index funds and through tax-advantaged retirement accounts such as IRAs has a higher likelihood of success than relying on risky investing strategies. AMC’s value is currently lower than it was before the rise of meme stocks in 2021. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. Even with meme stocks, the old adage, “Don’t put all your eggs in one basket,” still rings true. The good news is that meme stocks come from all nooks and crannies of the stock market, so it’s possible to build a diversified portfolio of holdings that can catch a tailwind from various places.
The future of meme stocks
- Even with meme stocks, the old adage, “Don’t put all your eggs in one basket,” still rings true.
- Meme stocks became all the rage among retail investors during the COVID-19 pandemic.
- GameStop and other such meme stocks are publicly traded equities whose stock price is heavily influenced by social media.
- Although meme stocks “generate a lot of market engagement, which is ultimately a good thing … the volatility in these stocks is extreme,” JJ Kinahan, the CEO of IG North America, said to Reuters.
- While they may seem like risky and speculative investments, meme stocks have gained a cultlike following and caused major disruptions in the market.
Memes make a perfect replacement vehicle here as their origin often becomes obscured due to endless sharing and reposting, and a clever ad can point you in the desired direction without explicitly saying anything. The process involves extracting a patient’s T-cells and modifying them to produce specific receptors on the outside known as chimeric antigen receptions (CARs). These CARs are multiplied in heavy quantities in a lab and re-infused into the patient’s body. The CARs can identify specific antigens on the surface of cancer cells to target them for termination. CAR-T treats lymphoma and leukemia successfully but can cause cytokine release syndrome (CRS).
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So it is perhaps unsurprising that GameStop was among the first meme stocks to see a resurgence earlier this May, along with other prior meme stocks such as AMC Theaters. “Investor appetite for ‘meme stocks’ may already be waning,” CBS News said, just days after they returned to the scene. The original meme stock, GameStop is one of the world’s largest video game retailers, Forex basic selling video games, gaming consoles, accessories and collectible merchandise. Determine the appropriate timing for entering and exiting meme stock positions.
Essentially, while in the past only the rich and powerful could mobilize the masses through propaganda, now the power equally rests in the hands of the everyman. The ape imagery is particularly important as “ape” is a self-moniker of meme-stock investors. Furthermore, it appears that Musk is willing to embrace his personal memeness. This should certainly be regarded as an opinion, but many of the fun poses he struck during his address after selling a part of his Tesla shares appear like meme-bait.
That truth, along with continued pardons from President Biden for marijuana crimes, implies that Federal legalization remains a possibility. To be clear, I still don’t like Tilray on a fundamental basis, but I believe it has a strong chance to rise in price for the aforementioned reasons. Tilray has seen a lot of positive action over the past few days and that is largely a reflection of a few factors. Frankly, there are many other better investments than Tilray and many better investments within the cannabis sector as well.
The company had given guidance questrade forex that it expected revenues between $3.46 billion to 3.54 billion in 2023. It upped that range to between $3.67 billion and $3.72 billion following its Q3 earnings release. DJT has been valued in the billions by folks who believe spreading conspiracy theories on a livestream constitutes a viable business model. The stock’s recent rally has been propelled more by blind devotion than hard data. TSLA remains massively overvalued and it’s heading for a date with gravity.
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Meme stocks are closer to penny stocks than blue-chip stocks and don’t pay dividends. Investing in meme stocks can be appealing because of the potential CMC Markets Review for high returns in a short time. These stocks often experience significant price volatility, driven by social media trends and online communities.
And then trading tools like moving averages, momentum oscillators and support/resistance concepts can narrow down entry and exit points to maximize profit. Technical and fundamental analysis has been applied to stock research for decades, and meme stock prices are influenced by many of the same factors as other volatile stock segments. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. 71% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.