What makes a meme stock?
What makes Palantir a classic meme stock?
- Several narratives about Palantir are contributing to its price fluctuations. ...
- Sentiment-related data should be a valuable predictor of Palantir’s future value. ...
- Palanatir’s share price tends to follow swings in the direction and tone of short-term media sentiment.
What are meme stocks?
The last few days have been exciting for meme stock investors. With macroeconomic tensions easing slightly and some investors jumping back into aggressive plays, stocks like GameStop (GME) - Get GameStop Corp. Class A Report and AMC (AMC ...
How to follow meme stocks?
The stock is trading at seven times its price at the start of last year. Other meme stocks have fared worse, with favored retailers especially lagging the broader market. Higher interest rates often correlate with lower valuations for riskier assets, with investors fleeing meme stocks, cryptocurrencies and the electric-vehicle sector.
What is meme stock mean?
This means option selling strategies ... https://investorplace.com/2022/01/amc-stock-may-finally-be-finding-a-floor-after-the-meme-massacre/.
What do they mean by meme stocks?
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.
Why do people invest in meme stocks?
A meme stock's value is a result of its hype on social media and not necessarily the company's performance. Though there is a potential for monumental gains, meme investors are more likely to experience potentially bigger losses as the stocks become overvalued and their price dramatically plummets.
Why are meme stock called apes?
And the new investors who embraced the company, adopted a nickname for themselves, the apes. The name is a reference to The Planet of the Apes movies, about a band of primates that overthrows mankind. Video: Apes win war.
Is Robinhood a meme stock?
Robinhood is not a meme stock and doesn't plan to sell shares to raise funds, CFO says. Newly public stock trading app Robinhood is not looking to do a secondary offering to take advantage of its retail investor-driven share price rise, according to the company's chief financial officer.
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.
What does Stonks mean in slang?
Stonk, a deliberate misspelling of stock (meaning “a share of the value of a company which can be bought, sold, or traded as an investment”), was coined in a 2017 meme. The word is often used humorously on the internet to imply a vague understanding of financial transactions or poor financial decisions.
What does ape mean in Crypto?
What Is Apeing? Apeing is when a cryptocurrency trader buys a token shortly after the token project launch without conducting thorough research, usually because they are fearful of missing out on potential gains that could be lost if they hesitate in order to conduct due diligence.
What does ape mean in finance?
Annual premium equivalentAnnual premium equivalent (APE) is specifically used when sales contain both single premium and regular premium business. Single premium insurance policies require a single lump-sum payment from the customer or policyholder.
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. These online communities can go on to build hype around a stock through narratives and conversations elaborated in discussion threads on websites like Reddit and posts to followers on platforms like Twitter and Facebook.
Understanding Meme Stocks
A meme is an idea or some element of popular culture that spreads and multiplies across people’s minds. Memes gained increasing prevalence and relevance as the internet and social media grew, allowing people to rapidly spread humorous, interesting, or sarcastic videos, images, or posts to others around the world.
GameStop: The First Meme Stock
In August 2020, an activist investor named Ryan Cohen posted to the subreddit explaining why shares of brick-and-mortar video game retailer GameStop Corp. ( GME) could be a good bet.
Other Meme Stocks
While GameStop was the first successful meme stock, it was not the only one. WallStreetBets users quickly identified other downtrodden stocks with heavy short interest to boost. These included AMC Entertainment Holdings Inc.
A Meme Stock Glossary
Meme stock communities have developed a specific lingo used in their posts online. Some of these terms include (along with emojis used to denote them online):
Special Considerations
While meme stocks have been a boon to individual investors, day traders, and brokerage platforms, companies have also capitalized (quite literally) on the meme stock phenomenon.
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).
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.
Recommended Articles
This has been a guide to meme stocks and their meaning. Here we discuss how does meme stock work, along with cycle, examples, and risks. You may learn more about financing from the following articles –
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.
What is the second most popular stock in the category?
AMC Entertainment, the popular movie theater chain, is arguably the second most popular stock in the category. Like many other companies, the coronavirus outbreak led to significant hardship for AMC. Theaters pack large crowds of people into small rooms, which becomes a playground for communicable diseases, like coronavirus.
Is it fun to trade stocks?
Trading in stocks that have a social media buzz around them can be fun, and if you place buy and sell orders at the right time, it can be incredibly lucrative.
What are some examples of less favored stocks?
Less favored stocks such as Gamestop (heavily shorted) Meme stocks, particularly Gamestop (GME), can have relatively low numbers of shares in issue but more specifically, a low free float (number of shares that can be actively traded), when compared to mainstream stocks like Apple or Bank of America for example.
What is a meme stock?
Meme stocks are shares that tend to rise exponentially after going ‘viral’ on social media platforms or online forums often without any justification provided by the fundamental value o f the share itself.
Does Charles Schwab offer zero commission?
In October of 2019, online brokerage Charles Schwab announced that it would offer zero commission stock trading, creating a domino effect as numerous other players followed suit.
