KISATO

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. In addition to GameStop, examples of meme stocks include AMC, and BlackBerry.

• Our partners cannot pay us to guarantee favorable reviews of their products or services.
• Both prices and trading volumes of meme stocks may be exceptionally volatile, as the hype on platforms like Reddit can cause spikes in demand.
• In May 2024, Nokia was one of a handful of meme stocks to be revivified by Keith Gill’s return to X (formerly Twitter).
• 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.

Table of Contents

A single X post about GameStop has generated tens of millions of views, as of mid-May, and the price action has been just as notable. On May 10, GameStop was trading below $18 before jumping near $50 by May 14. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Investing can be the most surefire path to becoming and remaining financially free. Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.

Legendary investor Warren Buffett offered an observation on market behavior in his tifia forex broker review 2023 letter to Berkshire Hathaway shareholders. But traders should keep in mind that even after their recent surge, GameStop shares are still down about 75 percent from their 2021 peak. I’ve been writing for a broad array of online publications for four years, always aiming to make important insights accessible. It’s my goal to ensure that as many people as possible can make informed decisions about their money, and get the most out of their finances with the least amount of stress.

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. But, whatever the company one day becomes, the stock GME will always be known as the one that defeated Wall Street. The stock has fallen back to Earth and trades at around $20 per share.

What are meme stocks?

Because many meme stocks are based in the USA, you may be charged a foreign exchange fee. There is also collaborative element to the online chatter that drives meme stocks, and a alpari forex broker review community found in joint narratives built around potential meme stocks. In the case of GameStop (GME) members of “r/wallstreetbets” bought up shares with fervor, knowing hedge fund managers counted on it as a shorted stock, eventually driving up the price from $2.75 per share to $500 a share. One visible outcome of the meme stock saga has been an increase in interest in retail investing.

Meme Stocks and Short Selling

It also means that, rather than waiting to build up a lump sum, Best investment opportunities investors’ money can gain market exposure right away. This news caught the attention of Reddit’s r/wallstreetbets forum, and AMC became one of the most frequently mentioned shares on the platform. Plus, the entire event has caused suspicion of Wall Street strategies, as well as the ethics of the relationship between traditional financial markets and current investors. Reddit is a community platform where people around the world can write whatever they please.

How we make money

Unfortunately, as we are also seeing right now, it can have dire consequences in the long run. The level of social media interest, and resultant real-world trading activity, helps to identify which stocks can be considered meme stocks. Once the online buzz about a stock reaches a tipping point, via mentions and memes, its popularity may lead to a rapidly inflating share price. Back in 2021, thousands of retail investors bought shares in the heavily shorted GameStop (GME), based largely on conversations held in the Reddit forum ‘WallStreetBets’. The rapid increase in GME’s value forced many hedge funds to exit short positions at a significant loss. Hedge funds are types of investments that pool money together from wealthy investors, and short selling is when you borrow shares from a broker and immediately sell them with the hope that the stock price will fall.

Should You Invest In Meme Stocks?

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. The payments we receive for those placements affects how and where advertisers’ offers appear on the site. This site does not include all companies or products available within the market.

So if you sell the stock you borrowed for $10, and then its price rises to $50, you’re responsible for those shares, meaning you’re on the hook for that $40 you owe the broker. GameStop may have started the meme stock mania, but others have followed in its footsteps. Below are the five best-performing stocks in the Solactive Roundhill Meme Stock Index, ordered by one-year returns.

One example is the VanEck Social Sentiment ETF (BUZZ 0.71%), an actively managed portfolio of 75 stocks that rank high in social media conversations. Top holdings in the portfolio include Robinhood Markets, Microstrategy (MSTR 9.94%), and Palantir. This ETF has an annual expense ratio of 0.75% (meaning it costs $7.50 per year for every $1,000 invested). Because a surge in buying activity can send a stock price soaring, there are some benefits to owning meme stocks (and potential meme stocks before they rocket higher).