However, Forbes Advisor Australia cannot guarantee the accuracy, completeness or timeliness of this website. As noted, the meme stocks phenomenon started in late 2020, when a group of retail investors using the online forum, Reddit, rallied around the US video game retailer, GameStop, causing its value to soar. By January 2021, when GameStop’s stock price surged and financial news companies began to extensively cover the nascent trend, meme stocks went from cult following to capturing headlines. Meme stocks are for thrill-seekers who oftentimes won’t profit from their investments in them. If you are such a person and can afford to risk losing money, then you may want to try investing in this type of stock.
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. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Roaring Kitty is Keith Gill who was also on Reddit as u/deepF…Value and active on the subreddit r/wallstreetbets. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.
The Rise Of Meme Stocks
Keep in mind that other fees such as regulatory fees, Premium subscription fees, commissions on trades during extended trading hours, wire transfer fees, and paper statement fees may apply to your brokerage account. Bonds.“Bonds” shall refer to corporate debt securities and U.S. government securities offered on the Public platform through a self-directed brokerage account held at Public Investing and custodied at Apex Clearing. For purposes of this section, Bonds exclude treasury securities held in your Jiko Account, as explained under the “Jiko Account” section. It is not as extreme an example as GameStop, but given the high-profile presence of CEO Elon Musk, it remains a company whose shares that can rise and fall based on online chatter.
It looks like the stock price stayed above that initial price of $14.07 for a lot longer than many critics of the meme stock trend would have expected. I mean, even though it clearly declined from June 2021, it was still relatively high through the end of 2021, and even deep into 2023! However, in the end, the actual finances and business case for the company apparently caught up to it. FinanceBuzz does not include all financial or credit offers that might be available to consumers nor do we include all companies or all available products.
Choose how much you’d like to invest in meme stocks
The investment research and financial services firm Morningstar reported that meme stock investing was especially popular with younger investors who shunned traditional investing strategies. “In some cases, meme-stock investors saw opportunities to react against short sellers who were looking for a stock to decline. Other meme-stock companies from the first wave were AMC (AMC), BlackBerry (BB) and Bed, Bath and Beyond. 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.
At the time, a common narrative was about how the meme stock was winning and proving traditional stock market analysts and investors wrong. Dumb old white-hairs — didn’t understand how the market was evolving! AMC trade99 review stock was going to win, because a giant group of obsessively online dudes was making it win.
Meme stocks are a unique and volatile investment option, often bull pennant driven by social media hype and community sentiment. While they offer the potential for high short-term gains, they also carry significant risks, including speculative valuation, liquidity challenges, and emotional decision-making. Approaching meme stocks cautiously and understanding their dynamics can help you make better investment choices.
Are Meme Stocks Real Investments?
Here, we take a look at what makes a meme stock and, once you’re aware of and accept the risks, explore how to invest in them. Let’s dive into the latest in the land of meme stocks and why it might matter for you. A broker like Vanguard is a good choice for passive investors who want to hold funds long-term as it doesn’t offer many tools for those who are more active traders or interested in short-term trading. Expense ratios (basically the management costs) for its ETFs and mutual funds are some of the lowest around, with an average of 0.10%, meaning every $10,000 invested costs $10 annually.
Do you have to pay taxes on meme stocks?
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- This value doesn’t often align with the actual success of the company that issued the stock.
- Platforms such as r/wallstreetbets on Reddit, Twitter, and TikTok became spaces where retail investors could exchange information quickly.
- Moreover, investing was seen as a way to be part of a movement—especially when meme stocks were framed as a battle between retail traders and hedge funds.
- 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.
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Every retirement article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of investing products. Risking money in speculative investments can be exhilarating, but it is rarely the path to long-term wealth. Investing in low-cost index funds and through tax-advantaged retirement accounts such as IRAs has a higher likelihood of success than relying on risky investing strategies. Some meme stocks didn’t fare as well as others, however, even with the occasional short squeeze. Other meme names have included Bed Bath & Beyond Inc. (BBBY), Koss Corp. (KOSS), Vinco Ventures (BBIG), Support.com, and even the meme stock enabler Robinhood Markets Inc. (HOOD). The renewed meme stock rally also extended to other companies such as AMC Entertainment, which saw its stock price jump 120% in early trading on Tuesday.
For more information please see Public Investing’s Margin Disclosure Statement, Margin Agreement, and Fee Schedule. Options.Options trading entails significant risk and is not suitable for all investors. Options investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date.
- Charles Schwab has funds that are straightforward options with no investment minimum.
- While we do go to great lengths to ensure our ranking criteria matches the concerns of consumers, we cannot guarantee that every relevant feature of a financial product will be reviewed.
- Part of the meme stock’s appeal is the opportunity to battle such institutional short-sellers by backing what’s perceived as a plucky underdog.
- You can find more episodes on our video hub or watch on your preferred streaming service.
- A “meme” is a term referring to a tidbit of culture — photographs, videos, phrases — that spread rapidly online through social sharing.
- There’s a lot of short interest in the stock or a large proportion of the company’s outstanding shares have been sold short.
Terms connected to meme stocks
Somehow, however, the stock became a giant meme stock that “benefited from” a massive influx of investments in 2021. The following are two graphs that are the same — a 5-year stock price graph. I just put the marker in different places to highlight the stock price at those times. Additional information about your broker can be found by clicking here.
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It was enough for many followers to get excited about a meme stock revival. When covering investment and personal finance stories, we aim to inform our readers rather than recommend specific financial product or asset classes. In January 2021, Nokia’s share price jumped 106%, causing a short squeeze.
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