what is stock meme

by Maurice Quigley Published 3 years ago Updated 2 years ago

What is meme stock meaning?

A meme stock is a share of a company that quickly jumps in price due to the attention of a dedicated online following. Meme stocks usually gain popularity through discussion threads on community forum sites such as Reddit and social media platforms. The first successful meme stock was GameStop Corp (GME)

What are meme stocks examples?

List of meme stocks to watchGameStop (GME) The most famous example of a recent meme stock controversy involves the US video gaming and consumer electronics retailer, GameStop. ... AMC Entertainment (AMC) ... BlackBerry (BB) ... Nokia (NOK) ... Bed Bath & Beyond (BBBY)

Why do they call meme stock?

A meme stock is a stock that has seen an increase in volume not because of how well the company performs, but rather because of hype on social media and online forums like Reddit.

What is the meme stock craze?

The meme stock craze — which multiplied the value of beleaguered companies like GameStop (GME) and squeezed hedge funds that bet against them — became a symbol of the populist fight between small-time traders and Wall Street juggernauts.

Should I invest in meme stocks?

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. A meme stock's value is a result of its hype on social media and not necessarily the company's performance.

Are meme stocks real?

What exactly are meme stocks? 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.

Who started meme stocks?

Meme stocks, in their present form, arose in the year 2020 out of the subreddit r/wallstreetbets. GameStop (GME) is widely regarded as the first meme stock, whose stock price rose as much as 100× over the course of several months as members of its meme community crafted a spectacular short squeeze.

How are meme stocks chosen?

A meme stock's clout grows on social media, which means it stems from social sentiment. There's a social sentiment indicator in the stock market that helps investors determine how a particular company is performing in terms of popularity. The indicator requires data from social media and businesses to build the charts.

What is the best meme stock?

The 7 Best Meme Stocks to Buy NowSPCEVirgina Galactic$6.37TLRYTilray$4.3513AMCAMC Entertainment$10.87GMEGameStop$100.55BBBYBed Bath $ Beyond$8.362 more rows•May 25, 2022

How do you pronounce meme stock?

0:424:11What are 'meme stocks?' - YouTubeYouTubeStart of suggested clipEnd of suggested clipAnd created waves in investment circles just have a look at twitter or reddit. And see how much ofMoreAnd created waves in investment circles just have a look at twitter or reddit. And see how much of an impact they have over the financial markets.

Is PayPal a meme stock?

Popular meme stocks Meta Platforms (FB), PayPal (PYPL), and Spotify Technology (SPOT) have declined more than 25% in 2022.

Is GameStop a meme stock?

GameStop is the mother of all meme stocks. In fact, it was the stock that kicked off the whole meme frenzy. For most of 2020, GameStop was trading for less than $5 per share, and it looked like the COVID pandemic would destroy the retailer for good. But then Ryan Cohen, the founder of Chewy (CHWY) - Get Chewy Inc.

What is a meme stock?

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.

Why do meme stocks rise?

Meme stocks rise in popularity because of conversations held online. Due to internet virality, they tend to see rapid price spikes. Because the increased price is artificial and not the result of the company’s actual performance, these spikes are usually followed by an inevitable crash.

What does it mean to short a stock?

Short selling is when an investor—often an institutional investor like a hedge fund —borrows a stock and sells the shares with the intention of buying it back later to return. When someone shorts a stock, they’re betting the stock price will go down between the time they sell and repurchase the stock.

What is the early adopter phase of a stock?

Early Adopter Phase: A handful of investors believe a particular stock is undervalued and begin to buy in large quantities. The stock’s price slowly begins to increase. Middle Phase: People who are paying attention begin to notice the increase in volume. More individuals then start buying, and the stock’s price skyrockets.

Is Meme stock overvalued?

For this reason, these stocks often become overvalued, seeing drastic price increases in just a short amount of time. “Meme stocks are not a class of investments that’s covered in a textbook—they can be value or growth companies,” said Misty Lynch, financial advisor and certified financial planner with Beck Bode, in an email to The Balance.

Where to put your money instead of meme stocks

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. The meme investors who walked away with a lot of money were arguably just very lucky. This kind of trading is ultimately not that much different than gambling.

If you do want to trade meme stocks

For those still itching to trade the next viral stock, invest only with money you can afford to lose. Before you invest, you should make sure you already have an emergency fund set aside, you’ve paid off your high-interest debt and you’re already contributing to a retirement account (and meeting any 401 (k) employer match, if applicable).

Meme stocks like GameStop took off in 2021, and they're showing no signs of stopping. Learn about what meme stocks are, how they work, and if they're a good investment option for you

Nicholas has been a writer for the Motley Fool since 2015, covering companies primarily in the consumer goods and technology sectors. He is also the founder and president of Concinnus Financial, a Registered Investment Advisor based in Spokane, WA. He enjoys the outdoors up and down the West Coast with his wife and their Humane Society-rescued dog.

What are meme stocks, and are they worth the investment?

Meme stocks are a battleground. More traditional investors decry the lack of business fundamentals and strong performance to justify sharp surges in stock price.

Investing in meme stocks and ETFs

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.

How Does Meme Stock Work?

Meme stock’s popularity is solely due to the online hype. It has little to do with the business fundamentals, performance, or prospects, such as profitability Profitability Profitability refers to a company's ability to generate revenue and maximize profit above its expenditure and operational costs.

Meme Stock Cycle

The meme stocks cycle comprises four phases describing how investors evaluate, invest in, and use them:

Risks

Meme stocks are risky investments due to their tremendous volatility. The price fluctuates based on online forum discussions and the amount of excitement that the stocks generate.

What is a Meme Stock?

First off, a meme stock is simply a term used to describe any stock that experiences rapid price changes due to influences on social media.

What is a Short Squeeze?

We saw a huge short squeeze in January 2021 with the GameStop stock (GME). Basically retail investors (the everyday person on Reddit and Twitter) went head to head with hedge funds that were shorting GameStop.

List of Meme Stocks

GameStop and AMC aren’t the only securities considered in the ‘meme stock’ category.

How To Buy a Meme Stock

Before you go running off to buy one of these stocks, I think it’s important to answer the question first: Should I buy a meme stock?

Bottom Line on Meme Stocks

Investments into meme stocks, cryptocurrencies, precious metals, and other speculative commodities are usually driven by emotion and the fear of missing out. There’s nothing wrong with holding a small amount of speculative investments in your portfolio (3-5%).

What is meme culture?

The meme culture thrives on Twitter and Reddit specifically but is also shared in group messages. No one can define the term “meme” as it is used in various contexts, but in its purest form, a meme is an image or video that portrays a concept or idea.

What companies are posting record breaking quarters?

Companies like Amazon and Apple are posting record-breaking quarters. Yet, they receive no love from CNBC, Bloomberg, Forbes, CNN Money, or any other trusted media outlet. Instead, Gamestop, AMC, Clover Health, and Blackberry, to name a few, are skyrocketing as individual investors pour money into these stocks.

Do meme stocks have short interest?

The Stock Needs to Have Short Interest. The valuation around meme stocks is not derived from fundamental or technical analysis. In fact, most investors in meme stocks won’t acknowledge valuation as it is not part of their narrative or investing thesis.

Is meme stock a growth stock?

It is important to note that meme stocks should not be categorized as growth, dividend, or value stocks. Some equate meme stocks to gambling. That said, all meme stocks share similar characteristics: The valuation around meme stocks is not derived from fundamental or technical analysis.

Is the rise of meme stocks disturbing?

The rise of meme stocks is nothing short of fascinating and disturbing. The pure chaos and buzz around meme stocks are what makes them exciting to watch and talk about.

What is meme stock craze?

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.

Why are meme stocks so overpriced?

Generally, these stocks are overpriced, all because of market speculation, resulting in huge changes in their valuations and peaks of rapid moves within a short period of time . However, this is not to say that meme stocks are bad stocks. As a matter of fact, most of them have good fundamentals but sometimes they are overvalued ...

What was the epic short squeeze between the crowd of retail traders on Reddit and the giant hedge funds?

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.