However, unlike traditional stocks, demand for a meme stock, and therefore its share price, does not seem to be primarily driven by new information about the company or general economic endologix defends afx stent grafts after fda warning or market conditions. People often purchase stock shares that they believe will go up in price. In other words, they believe the long-term value of the company will increase over time.

A short squeeze occurs when a stock heavily shorted by investors suddenly rises in price, forcing short sellers to buy shares to cover their positions. This buying activity creates further upward pressure on the stock price, leading to an explosive rally. Meme stocks, which often attract significant short interest due to perceived overvaluation, can become prime candidates for short squeezes. Social media activity is the main driver of the prices and trading volumes of meme stocks, noted Britannica Money. “The hype of meme stocks is generally not based on changes in the underlying company’s fundamentals of financial performance,” wrote Britannica Money, but in messages on social media.

Gill accumulated shares and stock options beginning in 2019, sharing his insights and activities with the WallStreetBets board. To understand meme stocks and pick the next meme stock, you’ll need to understand the meme definition. In a broad sense, a meme is simply an imitation, such as an image or video spread around the internet.

1. Other companies that have become meme stocks to varying degrees include Plug Power (PLUG), Virgin Galactic (SPCE), Palantir (PLTR), and BlackBerry (BB).
2. GameStop shares skyrocketed nearly 100% on Tuesday, May 14, 2024, following a 74% increase the previous day.
3. To participate, you need to be connected to the relevant social media sites.
4. In general, many of the meme stocks that saw sky-high stock prices in 2021 have come down significantly in 2022.

Risks and rewards of Meme stocks

There’s a slim chance you could get there with a winning lottery ticket, a rich uncle you didn’t know about, or a killer meme stock trade in which you happen to get in (and out!) at the right time. SoFi’s financial services — all unified together via a singular app — got its start in the student loan niche of the industry. But since becoming a public company, the fintech stock favorite has gotten aggressive, expanding its reach and has added a few million new customers in recent years. As with other fast-moving businesses, SoFi’s biggest hurdle now is how quickly it can focus on breakeven. 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.

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These factors can lead to rapid price spikes, but they often lack the underlying stability of traditional stocks. Due to their volatility and reliance on social media hype, meme stocks are often risky and speculative. While they can lead to quick gains, their prices can also crash just as quickly, making them unsuitable for most long-term investors. These changes lowered transaction costs of and increased access to investing in the stock market. Not surprisingly, younger and first-time investors make up a large share of traders on these mobile trading apps.

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Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard Dominate day trading to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. “A meme stock is any publicly traded stock with a price performance that’s strongly influenced by activity on social media,” according to Britannica Money.

Prices rose 11.27% in the month to 16 May, topping $4 before settling back to around £3.90. Despite its steady decline, BlackBerry is another popular stock pick for Reddit’s investing community. While the company hasn’t produced a phone since 2016, it continues to operate, instead providing cybersecurity and encryption services. Gill made no mention of GameStop or any other company in his posts, but his reappearance on X – previously known at Twitter – was enough to spark fresh investment that saw GameStop’s price rise by over 74% in a single day. On 13 May, Keith Gill – better known by his social media handle, Roaring Kitty – posted to hire mariadb developers and dedicated sql developer mariadb X for the first time in three years.

Meme Stocks and Short Selling

The bonds in the Bond Account have not been selected based on your needs or risk profile. The bonds in your Bond Account will not be rebalanced and allocations will not be updated, except for Corporate Actions. We believe everyone should be able to make financial decisions with confidence. You’ll also want to make sure that your decision to buy a meme stock isn’t driven by FOMO (fear of missing out). That’s a type of emotional buying that may cause you to make decisions you’ll regret. This article explores the meaning of a meme stock, what causes it and what are its likely consequences for the investor.