A high short interest can potentially lead to a short squeeze down the road, especially if the business does well and proves the naysayers wrong. In any case, I’d certainly recommend considering prtrend buying MSFT stock now . I’ve been interested in the shares for some time, and I may pull the trigger on it soon. All indications are that the GME fan base remains as strong as ever.
- First of all, retail traders are big fans of left-for-dead turnaround stocks in the wake of the pandemic.
- Rather, speculation and a stampede by retail investors resulted in a tremendous rally by GME stock which was unexpected by most.
- It also depends on knowing which stocks will pop and which won’t — which is essentially impossible.
- The company produced (drum roll) only $2.23 million in sales during the first quarter (it’s a $1.62 billion company, for context).
Meme stocks must have a high short interest to spark a short squeeze. Meme stocks should have social media buzz, a huge rising volume and a small float. Meme stocks became all the rage among retail investors during the COVID-19 pandemic. Meme stocks are created when a company’s shares catch fire with individual investors on social media platforms such as Reddit and quickly skyrocket in price. But, as many traditional investors and analysts point out, these viral stocks can be very risky since they rely on high interest from small investors to sustain the stock prices’ liftoff “to the moon.” Simply put, meme stocks skyrocket in price in a short period (often hours or days) because of a sudden surge in interest online or on social media and subsequent buying among small individual investors.
Could This Be the Next Big Meme Stock?
GameStop was a dying video game retailer, one of the last ones standing. GameStop stock had a 140% short interest, making it highly susceptible to a short squeeze, akin to lighting a match in a kerosene-soaked warehouse. However, that victory was short-lived as meme stocks deflated as quickly as they inflated during the bear market 2022. As the smoke clears and the stock market recovers in 2023, retail traders wonder what the next meme stock will be that spawns another meme stock mania.
The company, or the “consultants,” also sells cosmetics and travel container products. The company has seen declining sales and has pushed back its 10-K report, and received a non-compliance listing notice from the New York Stock Exchange on June 7, 2023. All this seems like very bearish news, so its short interest rose to 27%.
What Are Meme Stocks and Are They Worth the Investment?
The company has not profited in its operating history since its launch in 2009. In this article, we will review six stocks that could be the next big meme stocks leading the resurgence of the meme stock craze. Jeremiah Johnson says he has “an embarrassing amount” of Reddit karma. So, as a longtime moderator of subreddits like r/economics, he was part of a select group of power users who were granted first dibs to buy stock in Reddit’s IPO as the company prepares to go public. Even with meme stocks, the old adage, “Don’t put all your eggs in one basket,” still rings true. The good news is that meme stocks come from all nooks and crannies of the stock market, so it’s possible to build a diversified portfolio of holdings that can catch a tailwind from various places.
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 coinberry review based on social media popularity and market sentiment. The top 25 such firms are included in the portfolio, which is re-examined and rebalanced twice a month.
Meme stock activity was given a great boost 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. Another common feature of meme stocks is high short interest, which means many other investors are betting the stock will fail.
Can I make money with meme stocks?
The meme stock movement unofficially started in the summer of 2020, when most people were stuck at home during the first few months of the pandemic. Looking to turn some of that extra free time into money, many people turned to the stock market and social media for ideas. While it is possible to make money with meme stocks, it is an extremely risky venture. Meme stock investing relies on trying to time the market, which humans, even those professionally trained, are notoriously bad at. It also depends on knowing which stocks will pop and which won’t — which is essentially impossible. When online investors understood the short positions against GameStop, people took it on as a Robin Hood-like adventure (often using the trading app Robinhood to do so).
© 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. A “meme” refers to viral internet content in images with funny captions. Johnson said he plans to take Reddit up on its offer to invest early, but he’s motivated by the ability to chronicle the experience for his newsletter, rather than for the potential returns.
Technical and fundamental analysis has been applied to stock research for decades, and meme stock prices are influenced by many of the same factors as other volatile stock segments. If you’re an investor looking for a longer-term holding (think years rather than days, weeks, or months), there are some important factors to consider before buying a meme stock. Some business fundamentals and economic trends can go a long way toward balancing out what can be fleeting social media trends or hopes of a short-term short squeeze. Some of the more popular meme stocks, such as AMC and particularly GameStop, continue to have higher stock prices than before the short squeezes in 2021. Without their cult followings, meme stocks are not necessarily valuable assets.
From there, the number of retail investors buying shares and call options snowballed, driving up the price. The price increase drove out some short sellers early on as it attracted various big-name investors and public figures, such as Elon Musk and venture capitalist Chamath Palihapitiya. The best meme stocks to buy are usually beaten-down companies with a small market cap and a high percentage of shares sold short.
However, the stock fell steeply following the company’s announcement of the plan. Then, in January 2021, the short squeeze that The Roaring Kitty had suggested took place in earnest, with the price of GME shares exploding to nearly $500 amid a frenzy of short-covering and panic buying. Meme stocks, however, didn’t truly emerge until the year 2020 via the Reddit forum r/wallstreetbets. Unlike its predecessors and other investing message boards, WallStreetBets became known for its unconventional and often irreverent tone. In this and other forums that have popped up since, users work together to identify target stocks and then promote them, while also putting their own money to work.
The SoFi Social 50 ETF (SFYF) and VanEck Social Sentiment ETF (BUZZ) are similar — they track stocks with positive sentiment among traders and social media users, and thus have substantial exposure to meme stocks. After the GameStop incident, some hedge funds suffered significant financial losses, while some retail investors made millions. Other meme stocks emerged after GameStop, some with varying degrees of success.
Reddit meme stock crazes before the company IPOs
Amit Kukreja, a stock market YouTuber who uses Reddit, doesn’t have such high hopes for Reddit’s IPO. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. This Canadian company is known for pioneering velocity trade the smartphone, but it quickly went by the wayside when Apple revolutionized the space. These days, Blackberry is a software firm providing endpoint security software and other Internet of Things management products for customers such as the auto industry.