what is the next meme stock

These ETFs hold familiar meme stocks such as Gamestop and AMC, and they also hold a few stocks some wouldn’t think to call meme stocks, such as Tesla and Peloton. 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. With the internet, chat rooms and discussion boards devoted to investing and promoting stocks also arose. In the late 1990s and early 2000s, these sites helped promote and drive up the prices of so-called dotcom stocks—a bubble that famously burst with far-reaching economic consequences.

  1. It also depends on knowing which stocks will pop and which won’t — which is essentially impossible.
  2. The short interest, therefore, had grown to over 100% of the shares outstanding.
  3. According to the Schwab Q1 Trader Sentiment Survey, 35% of Charles Schwab and TD Ameritrade traders are more aware of their risk tolerance and factor it in before making momentum-based trades after the meme stock frenzy.
  4. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
  5. Rivian is currently in the midst of “production hell,” a phrase coined by Tesla CEO Elon Musk when his company was trying to ramp up factory production to stem cash losses.

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. In 2021, retail investors bet big on so-called “meme stocks,” with the goal of making money and upending power dynamics on Wall Street. 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.

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Typically, larger institutional investors have overlooked these companies due to uncertain fundamentals. As such, those hoping to participate early must closely monitor online discussions for clues about trends. Named https://www.investorynews.com/ after the virality of internet memes found on social media, these stocks saw online communities form around them to boost and hype their prospects, even though meme company fundamentals remained questionable.

what is the next meme stock

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. People learned major investing lessons during the craze, whether investors made money from meme stocks or not. According to the Schwab Q1 Trader Sentiment Survey, 35% of Charles Schwab and TD Ameritrade traders are more aware of their risk tolerance and factor it in before making momentum-based trades after the meme stock frenzy. And 22% are more careful about the sources they use for their investment research; additionally, 15% are more careful about diversifying their portfolios.

Meme Stocks: What They Are and 5 Top Stocks for March 2024

On the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. A member of the hot 2020 IPO stock class, Palantir quickly gained a large investor following after making its public debut. The company builds enterprise big data and AI software that helps organizations update their operations for a digital era.

WallStreetBets users quickly identified other downtrodden stocks with heavy short interest to boost. These included AMC Entertainment Holdings Inc. (AMC), the movie theater chain that saw flagging profits amid the COVID-19 pandemic, and Blackberry Limited (BB), the outmoded smartphone maker. 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. 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.

what is the next meme stock

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. As with other highly volatile investments (such as the related https://www.day-trading.info/ cryptocurrencies movement), there are drawbacks to betting on meme stocks. However, simply writing off all meme stocks as too risky can be a mistake. For the right person, investing in the right meme stock for the right reasons can make a lot of sense.

best-performing meme stocks

As the price of the shorted stock rises, the short seller will begin to experience losses. These losses must be covered in a timely fashion, often prompted via margin calls, whereby the broker demands funds to make up for those paper losses. One of the features of meme stocks, especially early on, has been that they tend to be heavily shorted names. This means that there is a lot of short interest in the stock, or that a large proportion of the company’s outstanding shares have been sold short. Indeed, as these became recognized meme stocks, members of r/wallstreetbets and similar outlets began to acknowledge the humor (for the “lulz”) of seeing such legacy companies emerge from the ashes in the stock market.

A meme stock refers to the shares of a company that have gained viral popularity due to heightened social sentiment. This social sentiment is usually due to activity online, particularly on social media platforms. These online communities can dedicate heavy research and resources toward a particular stock. Meme stocks often have heavier discourse and analysis in discussion threads on websites like Reddit and posts to followers on platforms like X (formerly Twitter) and Facebook.

Now in year three of the movement, new meme stocks are being created all the time as individual investors look for new ways to beat the stock market. Here are five to do some more digging on (beyond arguably the two most famous meme stocks — video game retailer GameStop (GME 1.73%) and the world’s largest movie theater chain AMC (AMC 1.33%). If you’re excited about investing in meme stocks, but don’t love the risk of holding a singular stock, the Roundhill exchange-traded fund MEME offers investors exposure to 25 meme stocks in one ETF. 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. 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).

What are meme stocks?

While several massive companies like Apple, AMD, and Tesla are popular among retail investors, we have focused on smaller companies that retail investors are more likely to move the needle on. We have then ranked those popular meme stocks based on the number of hedge fund shareholders of each (ties are broken by the amount of money hedge funds have invested in each stock). Collectively, their independent actions have been shown to initiate short squeezes in heavily shorted names.

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 https://www.forex-world.net/ well as regulatory fines and restitution of approximately $70 million. 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. The surge of its stock wasn’t caused by any real changes in its underlying business.

In November 2020, it became public knowledge Cohen owned a 10% share in the company. By closing two days later, the value doubled; an 8x increase from the price at the time of Cohen’s and Gill’s previous posts. For those looking for the next big meme stock, there are certain stocks worth watching. Here are three top meme stocks I think are worthy of being kept on  watchs list right now, even for investors who don’t necessarily want to step into the fray now. Even with meme stocks, the old adage, “Don’t put all your eggs in one basket,” still rings true.