what is ameme stock

Summary

• Meme stocks are stocks with a compelling narrative that are hyped up and popularized by retail investors on social media platforms.
• The most well-known meme stocks include GameStop and AMC Entertainment Holdings.
• Meme stocks are extremely volatile, and their prices can skyrocket and subsequently reverse over a short period of time.

Full Answer

What are meme stocks?

Feb 22, 2022 · What Is a Meme Stock? A meme stock refers to the shares of a company that have gained a cult-like following online and through social media platforms.

Are meme stocks a good investment in 2021?

Oct 31, 2021 · A meme stock is a security that has seen an increase in trading volume after going viral on social media or an online forum. Meme stocks have become increasingly popular due to a Reddit page called WallStreetBets.

How did meme stocks gain traction in 2020?

Oct 18, 2021 · But what is a meme stock exactly? Meme stocks refer to a select few stocks that gain sudden popularity on the internet and lead to sky …

Is it legal to trade meme stocks?

Jan 21, 2022 · 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 ...

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Meme Stocks Explained

Erin Gobler has over a decade of experience writing content. She's been a freelance personal finance writer for over three years and covers investing, cryptocurrency, stocks, and more. Her work has been published on major financial websites including Bankrate, Robinhood, LendingTree, The Simple Dollar, and more.

Definition and Examples of a Meme Stock

A meme stock is a stock that has seen an increase in volume not because of how well the company’s performs, but rather because of hype on social media and online forums like Reddit. For this reason, these stocks often become overvalued, seeing drastic price increases in just a short amount of time.

How Does a Meme Stock Work?

Meme stocks rise in popularity because of conversations held online. Word travels fast on the internet, and when a stock goes viral by word of mouth, it tends to see rapid price spikes.

Notable Happenings: GameStop

GameStop became perhaps the most publicized meme stock in January 2021 when its price spiked hundreds of dollars in a matter of days. Users on the subreddit WallStreetBets began buying GME after they learned a hedge fund had shorted the stock .

What It Means for Individual Investors

One visible outcome of the meme stock saga has been an increase in interest in retail investing. Despite the actions of Robinhood and other brokerage firms, new downloads of those apps skyrocketed after the events surrounding the GameStop stock.

How Meme Stocks Came To Popularity

GameStop, AMC Entertainment Holdings ( NYSE: AMC ), Koss ( NASDAQ: KOSS) are some of the most popular meme stocks, simply because their prices soared outrageously.

Trading Meme Stocks

The epic short squeeze between the crowd of retail traders on Reddit and the giant hedge funds that had heavily shorted faltering stocks and was a landmark moment for many traders.

Bottom Line

The meme stock craze has forced hedge funds and money managers to start paying much more attention to what smaller traders are doing, as they discuss their trades on social media sites and pitch ideas for stocks to target.

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SEC Looking To Ban Payment For Order Flow: What This Could Mean For Robinhood

The U.S. Securities and Exchange and Commission (SEC) is considering a full ban on a controversial practice in the brokerage industry, known as payment for order flow (PFOF), according to Chairman Gary Gensler, who was recently interviewed by Barron’s. On Aug.

Meme stocks, explained

A meme stock is any stock that sees increased popularity or awareness based on social media discussions. One platform in particular is at the center of the meme stock rallies: WallStreetBets on Reddit.

Social sentiment: How meme stocks popularize

A meme stock’s clout grows on social media, which means it stems from social sentiment.

Big moments in meme stocks this year

Meme stocks became so popular in 2021 that one asset manager created a meme stocks ETF: VanEck Vectors Social Sentiment (BUZZ).

Meme stocks are prone to risk and reward

All investments carry a certain level of risk, some more than others. Meme stocks aren’t immune.

Bottom line

Sometimes, a meme is so cryptic that you have to be fully enmeshed in a social media group to understand what it’s saying.

Reddit Stocks and Meme Investing

Thanks to social media and other relevant online platforms, "too the moon" trading was developed.

How Is This Happening?

Once the pandemic swept across the United States, people were forced to stay home, and there were significant layoffs nationwide.

The Meme Stock Cycle

Early Adopter Phase: A large handful of investors believe a particular stock is undervalued and begin to buy in large quantities. The stock's price slowly begins to increase. This is the ideal time to get in.

Meme Stock FAQs

Here is a list of some of our most frequently asked questions about meme stocks.

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Schaeffer's Investment Research, Inc. has been providing stock market publications, market recommendation services and stock option education since its inception in 1981 by founder and CEO, Bernie Schaeffer.