What are meme stocks

There’s a good chance you have seen the term “meme stock” splashed across headlines before — even if you aren’t actively following business news. Rebate rates currently vary from $0.06-$0.18 per contract depending on the date of enrollment and number of referrals you make. The exact rebate will also depend on the specifics of each transaction and will be previewed for you prior to submitting each trade. This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. To learn more, see our Public’s Fee Schedule, Order Flow Rebate FAQ, and Order Flow Rebate Program Terms & Conditions. The WallStreetBets subreddit has 10.2 million readers and counting.

1. Here’s what meme stocks are and why they’re seeing renewed interest in 2024.
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4. This is known as a short squeeze, and it accelerates a stock’s price increases as more and more short sellers are forced to bail out to cut their losses.

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Also, we provide you with free options courses that teach you how to implement our trades as well. Our watch lists and alert signals are great for your trading education and learning experience. Other popular meme coins include Shiba Inu Token and any coin that has the name of Musk’s dog, Flloki, in the name. GameStop is undergoing a massive digital transformation that will likely see a shift in its business.

GameStop’s 5-Year Share Price Performance

Unlike online pump-and-dump schemes aimed at defrauding unwitting investors, the promotion of meme stocks largely involves buying and holding with the above-mentioned strong hands even after the price spikes. Theoretically, there can always be a meme stock short squeeze if shorted stocks exist. Unfortunately for Apes, GameStop and AMC have lost most of the gains they made during the squeezes. The key to being an Ape is having diamond hands, which means you hold the stock until the MOASS or Mother of All Short Squeezes occurs. While the cause might be admirable, these traders have also lost out on massive gains.

GME Is Squeezed Again

Dominated by younger investors, meme stocks are still seen as a way to generate outsized returns in a short period, especially in the face of rising housing costs and inflation in general. But meme stocks also remain very volatile and risky, and retail investors are likely to be the ones to experience the most losses when it all comes crashing down. In late 2021, Roundhill Investments launched the Roundhill Meme Stock ETF. With the ticker symbol MEME, the exchange-traded fund tracked the performance of stocks with elevated social media activity and high interest from short sellers.

Bond ratings, if provided, are third party opinions on the overall bond’s credit worthiness at the time the rating is assigned. Ratings are not recommendations to purchase, hold, or sell securities, and they do not address the market value of securities or their suitability for investment purposes. Roundhill Investments came out with a meme stock-focused ETF in December of 2021 under the ticker symbol ‘MEME’. MEME features an equal-weighted portfolio of 25 stocks based on social media popularity and market sentiment.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal. Obviously, if you are invested in any meme stocks, you might expect heightened volatility—particularly when they are in the news, as they are now. It’s been more than 4 years since meme stocks emerged in the midst of the global pandemic. In case you haven’t stayed abreast of the meme stock craze, here’s a quick primer. Even with meme stocks, the old adage, “Don’t put all your eggs in one basket,” still rings true.

But so far, the rally hasn’t had the same momentum—GME’s price tumbled again within the same week and it remains well below its 2021 highs. Investopedia reports that Single Stock ETFs have been introduced to provide “leveraged long or short positions” on meme stocks like Tesla. A shorted stock is a stock which is borrowed from a broker and then sold, with the seller banking on buying it back later for a lower price. However, a short squeeze can occur when those borrowed stocks rise in price rather than fall. But people trade stocks for many reasons, not all of them supported by sound financial logic. A single social media post from Roaring Kitty may ignite the animal spirits that were in place during the pandemic, causing people to rush to buy shares of the same stocks to ensure they don’t miss out on potential gains.

However, after releasing new shares in a bid to raise capital for restructuring, its price shot up to $5 per share on 25 January. On 13 May, Keith Gill – better known by his social media handle, Roaring Kitty – posted to X for the first time in three years. The former financial analyst is a YouTuber, livestreamer and Reddit user, whose backing of GameStop helped propel the share’s popularity. First, we provide paid placements to advertisers to present their offers.

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It seems vague, but that is because meme stocks have encompassed various companies over the last year. These don’t apply to every example, but most will have at least some of these factors. As a result, short sellers were forced to choose between buying the stocks back at increased prices or waiting out a fall in price. The resulting millions lost by marquee-name banks and hedge funds immediately drew scrutiny to the phenomenon of meme stock trading. Without their cult followings, meme stocks are not necessarily valuable assets.

As internet chatrooms have abounded and market watchers found a place to share ideas and build a plan of action, “meme stocks” were born. One visible outcome of the meme stock saga has been an increase in interest in retail investing. Despite the actions of Robinhood and other brokerage firms, new downloads of those apps skyrocketed after the events surrounding functions of financial intermediaries the GameStop stock. The Robinhood app alone was downloaded more than 1 million times in the last week of January, when the stock surged and then later declined, according to a number media outlets, including Barron’s. If gambling or speculating, rather than investing, is your idea of accumulating wealth, then buying meme stocks is the way to go.