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Therefore, Palantir has become a very popular stock amongst social media traders. Is the stock volatile because it is a meme stock, or is it a meme stock because it is volatile? Either way, meme stock investors embrace the turbulence and live for the double-digit swings in either direction. The exact reasons for why meme stocks are again on the rise in 2024 are hard to pinpoint.
Terms connected to meme stocks
As a result, meme stocks can become overvalued relative to fundamental technical analysis. With tens of millions of members in r/WallStreetBets, all it takes is for one stock to be shorted for the entire army to buy in. Look at the meme stock craze as a message from retail traders to hedge funds. The stock market will always be tipped in favor of big money, but the little guy is finding ways to fight back. Meme stocks rose to prominence in early 2021 during the Reddit short squeeze event. There are conflicting thoughts on what a meme stock is in the investing community.
While there are rules to prevent things like inciting violence or illegal trades, these are not enforced across the board. Keep this in mind when reading content on its many forums and threads. Jody McDonald is a freelance writer based in Brisbane who specialises in writing about business, technology and the future of work. She’s helped a range of SaaS platforms and tech companies share their stories, and has written for the Mortgage and Finance Association of Australia magazine, MYOB Pulse, Anthill Magazine, Crypto News Australia and The Chainsaw. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which 12trader forex broker review are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
GME Is Squeezed Again
If you do not agree with any term of provision of our Terms and Conditions, you should not use our Site, Services, Content or Information. Please be advised that your continued use of the Site, Services, Content, or Information provided shall indicate your consent and agreement to our Terms and Conditions. The social media effect has been so strong that it has made millionaires overnight. Many trades for under a penny each, so you can theoretically amass millions of coins for a small price. Here, you’ll find annual and quarterly reports, allowing you to assess its operations and make an informed decision about whether to invest.
- Of course, many ordinary investors were drawn into the short squeeze by the idea of making a profit from driving up GME’s share price.
- The rapid and multiplicative effect of sharing such posts could make them go viral.
- BlackBerry, the Canadian brand behind the popular 2000s smartphone, has been struggling for over a decade, progressively losing market share to Apple’s iPhone.
- These firms have been generally unloved by most mainstream investors, as reflected in their previously desultory share prices.
- We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere.
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. The short-term share price lift resulted in unrealised losses worth over $1 billion for short sellers. 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.
What is a meme stock? How online social media can outsmart the market.
Other stocks, like AMC Entertainment (AMC), Bed Bath & Beyond (BBBY), Blackberry (BB), and Nokia (NOK), became targets of rampant speculation—and their prices fluctuated accordingly. Some companies, like the movie theater chain AMC, embraced their meme stock status by leaning into it across social media platforms (see figure 1). A meme stock’s value is a result of its hype on social media and not necessarily the company’s performance.
It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career. The stock’s price will rise, and short sellers will quickly need to close their short positions. 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.
If you do want to trade meme stocks
This rapid price appreciation caught short sellers off guard, resulting in significant losses estimated at over $1.3 billion in just the two days following Gill’s tweets alone. As noted, the meme stocks phenomenon started in late 2020, when a group of retail investors using the online forum, Reddit, rallied around Forex trading bots the US video game retailer, GameStop, causing its value to soar. Stocks are usually shorted when the share price is expected to decline due to poor company performance or unfavourable economic conditions. Short selling relies on ‘borrowed’ stocks that must be bought back and returned to close a position—which can be hard if prices rise quickly and investors aren’t selling, leading to short seller losses.
You can sell an investment by logging into your investing platform account, tapping the share you want to sell. Each investment platform has a slightly different process, but you’ll typically need ironfx review to type the name of your chosen company – or its stock market ticker symbol – into a search bar. Investing in regular instalments allows investors to benefit from ‘pound cost averaging,’ an investing technique which helps investors pay less per share, on average, overtime in a falling market. Meme stocks may be a fun investment option for investors keen to feel part of a trend but, influenced as they are by ever-changing social trends, they can be highly volatile.
By 2013, its market share had fallen to just 3%, according to Statista. BlackBerry, the Canadian brand behind the popular 2000s smartphone, has been struggling for over a decade, progressively losing market share to Apple’s iPhone. From “What is a meme?” to “What colors can dogs see?” to “What are CrossFit games?” – we’re striving to find answers to the most common questions you ask every day.
The Bullish Bears trade alerts include both day trade and swing trade alert signals. These are stocks that we post daily in our Discord for our community members. When some traders in r/WallStreetBets looked into the short position against GameStop, they realized what could be done. GameStop hit an unimaginable all-time high price of $483.00 per share in just a few weeks. Meme stock investors are often quite nostalgic for companies that were once thriving.
Despite the actions of Robinhood and other brokerage firms, new downloads of those apps skyrocketed after the events surrounding 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. Except in the case of GME, the hedge fund’s plans went wrong as so many retail investors started buying. There was outrage about what essentially amounted to a ‘pump and dump scheme’. There was also outrage over the way share trading platform Robinhood, and other brokers, suspended trading in GME at the height of the price rise.
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. You’re probably familiar with memes—bits of cultural info spread by imitation—but what about meme stocks? A meme stock is one whose share price is being driven by Internet culture. As a concept, they’ve only been around for a few years, but meme stocks have caused plenty of excitement—and, at times, pain—for active traders and everyday investors who get caught up in the frenzy. Social media activity is the main driver of the prices and trading volumes of meme stocks, noted Britannica Money.