Melvin Capital’s $4.5 billion loss in January was the most publicized one, but the total damage to the short sellers was said to be $13 billion. A meme stock refers to shares of a company that have gained popularity and value largely due to social media hype, rather than the company’s fundamental financial performance. These stocks are often heavily discussed on platforms like Reddit, Twitter, and Discord, where retail investors rally around a particular stock, driving up its price through collective buying. Unlike traditional stocks, which rise and fall based on a company’s earnings reports or other concrete financial data, meme stocks are driven by online sentiment and the fear of missing out (FOMO).

What are Meme Stocks?

There is some question as to whether the post-IPO jump for DJT and RDDT are due to viral popularity, or because they are the first two significant media companies to begin trading in quite some time. But for investors, understanding what it means when a company is mentioned as a meme stock. The meme stock craze has remarkable parallels with the stock pools of a hundred years ago. During the first third of the 20th century, the legendary stock market “operator” Jesse Livermore (see our October 2015 Quarterly Market Commentary) acquired a well-deserved reputation as one of the most skilled speculators in America.

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• Memes gained increasing prevalence and relevance as the internet and social media grew.
• The X4 account @unusual_whales posted a relevant clip of the interview on March 15th, 2025, gathering over 6,000 likes in four days.
• While fundamentally an enterprise analytics software company, Strategy has strategically positioned itself as a primary corporate holder of Bitcoin.
• The recent surge in retail investor activity, reminiscent of the meme stock craze in early 2021, highlights a potential paradigm shift in market dynamics.
• Robinhood and Webull are two popular trading platforms for active investors, boasting easy-to-use mobile investing apps.

However, this single-day surge is set against a backdrop of considerable volatility, evidenced by its 52-week range of $12.05 to $34.09. Mara Holdings is an example of the meme stock dynamic within the cryptocurrency sector. As a Bitcoin mining company, MARA’s stock price strongly correlates with the fluctuating value of Bitcoin. This inherent volatility, combined with heightened social media attention, firmly places MARA in the meme stock category. Meme stocks can be defined as stocks that gain popularity primarily due to the viral nature of memes, humorous images or videos shared online, about them. These memes capture the attention of the online community, leading to a surge in interest and trading activity for the particular stock.

Meme stock activity was given a great boost how to download metatrader 4 from bored individuals stuck at home during COVID-19 lockdowns combined with zero-commission brokerage apps like Robinhood. The Robinhood app saw overwhelming trading volume in meme stocks at times, causing multiple trade delays, outages, and platform crashes. This led to user outrage along with class action lawsuits as well as regulatory fines and restitution of approximately $70 million. The renewed meme stock rally also extended to other companies, such as AMC Entertainment, which saw its stock price jump 120% in early trading on Tuesday. AMC took advantage of the heightened interest by raising approximately $250 million through a share sale. A few days later, the former CEO of Chewy.com and investor Ryan Cohen purchased an unknown amount of GME stock, which Gill acknowledged on Twitter (now X).

Investment vehicles

Meme stocks defy normal trading patterns and are instead guided primarily by online subreddits and retail buyers. Market analysts and observers drew parallels between the 2024 rally and the original meme stock phenomenon of 2021. 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. 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.

While we acknowledge the potential of MSTR to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. Investing in Strategy is a leveraged bet on Bitcoin, amplified by meme stock dynamics. The company’s future performance is heavily dependent on Bitcoin’s price trajectory and sustained retail investor interest. This dedicated investor base continues to play a significant role in AMC’s stock dynamics, maintaining its meme stock identity. Recent trading data for AMC on February 27, 2025, shows a closing price of $3.22, a modest 1.26% decrease, with a volume of 8.81 million shares, somewhat below its average.

Furthermore, these create a buzz in the investment community, leading to panic buying even if the market is not doing well. However, this short-lived price increase immediately reverses, making meme stocks aafx trading far more volatile and eventually crashing. The value of shares rises in proportion to how well a community interacts with and responds to Internet memes. When a stock interests online audiences more and more and reaches a determined attention threshold, it automatically rises in value, becoming a meme stock. It, thus, attracts investors who buy them right away out of fear of missing out.

Musk has cheered on retail traders during the short squeeze bubble and has even shown his support for meme fads like the cryptocurrency DogeCoin. The first meme stock to become extremely popular was GameStop, which took off in 2021. Two big hedge funds and numerous investors started shorting the online video game retailer in 2020 after rumours of upcoming bad results.

• Stocks are usually shorted when the share price is expected to decline due to poor company performance or unfavourable economic conditions.
• A meme stock refers to shares of a company that have gained popularity and value largely due to social media hype, rather than the company’s fundamental financial performance.
• Stocks that go viral as internet memes, regardless of how well the firm performs in the market, are called meme stocks.
• However, it is important to approach meme stocks with caution, understanding the risks and rewards they entail.

Short Squeeze

In essence, meme stocks are equities that gain viral popularity among retail investors, primarily through social media and online forums. This popularity translates into rapid increases in trading volume and stock price, often irrespective of the company’s underlying financial health or business prospects. Since the bear market of 2022, many retail traders might lose interest in investing, or even have their accounts liquidated. But if we’re talking about which meme stock is next to potentially squeeze, it’s difficult to predict. The best way to find out which meme stock will pop next is to get on social media and see what the buzz is about.

Social media’s impact on stock prices

Despite the earnings miss, analyst consensus remains a Buy, with a high average price target of $536.90, suggesting a considerable upside potential from current levels. However, recent analyst actions indicate some price target reductions, reflecting concerns about Bitcoin’s inherent volatility. Try out what you’ve learned in this shares strategy article risk-free in your demo account. These cycles can happen as quickly as over a few days, so timing the market is crucial here. Before you open any position, you should understand how to manage your risk. Meme stocks came roaring back into fashion in May 2024, when Keith Gill, the analyst known as ‘Roaring Kitty’, resurfaced on social media.

On March 18th, Redditor /u/Tun-Tavern-1775 reposted a news article about a major Tesla investor calling for Elon Musk to step down as CEO to the subreddit /r/News,10 gathering over 67,000 likes in a day. Investors are buying the dip on quantum computing stocks, but is now the right time to get in? MarketBeat analyst Chris Markoch breaks down three intriguing picks beyond Rigetti.

For an option with no expense ratio whatsoever, consider what Fidelity offers. The brokerage has funds that track large-cap stocks, which the website says, “are considered to be stocks of the largest 500 U.S. companies.” Charles Schwab has funds that are straightforward options with no investment minimum. Expense ratios can be as low as 0.02%, meaning every $10,000 invested costs $2 annually. To invest in an index fund, you need to open a brokerage account, a traditional IRA or a Roth IRA.

However, it is important to recognise that social media platforms can be a double-edged sword when it comes to meme stocks. While they have given retail investors a voice and democratised access to information, it is crucial to approach the information shared on these platforms with caution. Reddit forum r/wallstreetbets rallied around the company – calling for aggressive option buying of its shares. This dramatically increased the price Forex day trading of the stock and short squeezed the hedge fund traders. Some hedge funds suffered significant financial losses, while some retail traders and investors made millions. In early 2021, a group of retail investors on the Reddit forum r/WallStreetBets started buying up GameStop shares en masse, driving the price from around $20 to nearly $500 in just a few weeks.

Then these legions of retail investors have coordinated their buying of these meme stocks on social media, which, in some cases, have caused massive short squeezes, driving up stock prices tenfold or more. As the chart on the previous page shows, GameStop’s stock experienced a parabolic liftoff during the first quarter. GameStop is a largely bricks and mortar retailer of video games and consumer electronics.