Meme Stocks: Definition, Examples, and Impact on the Market

Rivian has had hiccups scaling its R1T electric truck production, but it’s making progress. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. While Tupperware Brands currently has a „Hold“ rating among analysts, top-rated analysts believe these five stocks are better buys.

GameStop (GME)

Short selling is the process of selling borrowed stock at the current price, then closing the trade by purchasing the stock at a future time. What this means is that, if the price drops between the time you enter the trade and when you deliver the stock, you can turn a profit minus any fees or expenses. The trend underscored how rapidly coordinated buying and selling could lead to extreme price volatility, drawing the attention of regulators and the broader financial industry. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… In any case, I’d certainly recommend considering buying MSFT stock now .

Meme stocks: What are they and why you should be careful buying them

A broker like Vanguard is a good choice for passive investors who want to hold funds long-term as it doesn’t offer many tools for those who are more active traders or interested in short-term trading. Expense ratios (basically the management costs) for its ETFs and mutual funds are some of the lowest around, with an average of 0.10%, meaning every $10,000 invested costs $10 annually. But when a highly shorted stock rises in price quickly, short sellers sometimes scramble to get out of their trades.

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However, opinions were divided on whether this new surge would have the same lasting impact or if it was simply a brief revival of the speculative fervor that had characterized the earlier event. 2 reasons facebook stock is a buy Regardless, the sudden resurgence of meme stocks in May 2024 served as a reminder of the unpredictable nature of markets and the power of social media to drive investor behavior. After the initial meme stock craze, GameStop shares drifted steadily lower, settling at just over $10 a share by the Spring of 2024. However, in mid-May of that year, the stock experienced a sudden resurgence, fueled by the return of Keith Gill, aka „Roaring Kitty,“ to social media. That said, the number of retail investors who are interested in Microsoft and other mega-cap stocks is likely to increase meaningfully. That’s because, as stocks’ valuations come down, the share prices of many companies,  including Microsoft, have fallen meaningfully, making these names more attractive to many retail investors.

1. These days, Blackberry is a software firm that provides endpoint security software and other Internet of Things management products for customers such as the auto industry.
2. Gordon Scott has been an active investor and technical analyst or 20+ years.
3. Platforms like Reddit, Twitter, and YouTube contribute to the hype surrounding these stocks, with retail investors amplifying price changes through collective action.
4. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website.
5. Meme stocks rose to prominence in early 2021 when online communities of retail investors, especially on platforms like Reddit, drove up the prices of heavily shorted stocks like GameStop and AMC.

Top meme stocks have certain requirements to qualify as potential meme stocks. Their fundamentals should be pretty negative, which draws in bears and short sellers who expect the stock price to fall lower. Logically, this makes sense since the fundamentals usually determine a company’s underlying stock price. This negative sentiment causes short interest to rise, another key factor for meme stocks. Meme stocks should have social media buzz, a huge rising volume and a small float.

Once a stock becomes hard to borrow, even the most motivated short seller may be unable to do so. Then, in January 2021, the short squeeze that The Roaring Kitty had global currency vector free download suggested earlier took place in earnest, with the price of GME shares exploding to nearly $500 amid a frenzy of short-covering and panic buying. Once your account is open and funded, you can also choose from a number of different index funds, like an S&P 500 fund, a fund that tracks government bonds or a fund that tracks international stocks. Funds that track the S&P 500 are generally an effective way to earn a good return on your money over time. Historically, the average annual return for the S&P 500 hovers around 10%.

This raised more than $1.5 billion in the first quarter (Q1) from voracious meme stock buyers. While not making any recommendations or indications about GME or any other stocks, these posts nevertheless reignited frenzied interest in meme stocks, causing a massive surge in trading volume and price. GameStop shares skyrocketed nearly 100% on Tuesday, May 14, 2024, following a 74% increase the previous day. This 5 key strategies for an effective affiliate onboarding rapid price appreciation caught short sellers off guard, resulting in significant losses estimated at over $1.3 billion in just the two days following Gill’s tweets alone.