What Are Meme Stocks, and Are They Real Investments?

What Are Meme Stocks, and Are They Real Investments?

Companies that become meme stocks have usually performed poorly in recent years, and attracted attention from short-sellers – investors who effectively bet on the price of a share going down further. 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.

The financial institutions cited the need to meet financial requirements imposed by stock clearinghouses. Investors were outraged, sparking discussions about the fairness and transparency of the stock market. As far as anyone knows, the companies whose stocks are being traded as meme stocks haven’t actually done anything to reorient their fortunes in a way that would merit the tremendous run-up in their stock prices. A short squeeze is a relatively rare event that can yield eye-popping profits for people riding the wave.

• GME return volatility remains extraordinarily high and its price is much higher as of mid‐May 2021 than before January 13.
• With enough online support, meme stocks can maintain elevated stock prices regardless of the underlying company’s worth.
• Funds that track the S&P 500 are generally an effective way to earn a good return on your money over time.
• But they also warned that easy access could encourage people to trade too quickly or too rashly.

You can track the value of your investment by logging into your trading account at any time. The platform should tell you how many shares this will purchase, and what you’ll be charged in fees. It also means that, rather than waiting to build up a lump sum, investors’ money can gain market exposure right away. This has since decreased – despite a small rally in May 2024 – to around $5.50. This news caught the attention of Reddit’s r/wallstreetbets forum, and AMC became one of the most frequently mentioned shares on the platform. On 13 May, Keith Gill – better known by his social media handle, Roaring Kitty – posted to X for the first time in three years.

Meme Stocks: What Are They and How To Buy Them

However, because of the high volume of people involved, participants can significantly influence the price of a stock. Financial analysts and professional investors who care mostly about numbers like profits, cash flow and interest rates would say no. GameStop’s financial prospects did not change over the weekend, before the dizzying swings in its stock price. A post on Reddit late Sunday indicated that Keith Gill, a central character in the original 2021 meme stock crack, had built a sizeable stake in GameStop. Shares of GameStop closed up 21% to $28 after jumping above $40 right after the opening of trading.

What are meme stocks?

AMC’s value is currently lower than it was before the rise of meme stocks in 2021. Despite its partnerships with well-known fast and casual restaurants, sentiment turned sour as the competition crawled out of the woodwork, diluting its market share. The company has not profited in its operating history since its launch in 2009. It connects borrowers with lenders, including more than 60 banks and credit unions, to find the right match. The company claims that deriving a credit score is more accurate, reduces lenders’ default risk, and provides borrowers with faster and more personalized loans. UPST reached a high of $401.49 in October 2021 and fell to a low of $11.93 in May 2023.

Meme stocks may make you rich, but here’s why your money is better off invested elsewhere.

The trend emerged as lockdown measures kept would-be investors at home, commission-free trading apps such as Robinhood entered the scene and US citizens were deciding how to spend their Covid-19 government stimulus cheques. The payments we receive for those placements affects how and where advertisers’ extrasum forex broker review offers appear on the site. This site does not include all companies or products available within the market. Charles Schwab has funds that are straightforward options with no investment minimum.

The former financial analyst is a YouTuber, livestreamer and Reddit user, whose backing of GameStop helped propel the share’s popularity. To invest in an index fund, you need to open a brokerage account, a traditional IRA or a Roth IRA. You can often choose to invest in index funds via your employer-sponsored 401(k), too. There’s a good chance you have seen the term “meme stock” splashed Blue chip stock list across headlines before — even if you aren’t actively following business news.

They can do that only by buying shares of the stock, which can python math libraries set off a self-feeding cycle that makes the price shoot even higher. Memes began to take the form of humorous social media posts and viral videos with the advent of the internet. Meme stocks are so-named because ideas about them spread rapidly on social media and web forums. Meme stocks also see communities built around them that promote the hype and elaborate on the original meme, inventing specific terms and symbols to accompany the stock.

It also has the best stock symbol AI when AI integration and usage is a major tailwind. AI shares peaked at $183.90 in December 2020 before selling off to a low of $10.16 in December 2022. The short interest climbed on a bearish report released by Hindenburg Research, which sent shares falling by nearly 40% before surging through its yearly highs, peaking at $48.87 in June 2023. In addition, meme stocks are technically valueless assets, they often don’t hold any value in comparison to company-producing stocks, or valuable resources such as gold.