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Another reason for the initial meme stock trades may have been that interest rates were near record lows. Cash offered almost nothing in the way of a return, so trading stocks may have felt like a way to earn something, despite its high risk. But in 2024, interest rates are much higher and savers earn decent yields on the cash they hold.
It could also be worth comparing a company’s valuation to that of similar companies. One method for doing this is to look at 12-month share price forecasts, available via online investing platforms. Although GameStop’s share price subsequently fell, a fresh rally in May 2024 has sparked renewed interest in the concept of meme stocks. Investopedia reports that Single Stock ETFs have been introduced to provide “leveraged long or short positions” on meme stocks like Tesla.
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Investors may be looking ahead to potential rate cuts by the Federal Reserve, but those are far from a guarantee. BlackBerry’s share price soared from $6.63 to $14 within the space of a month during January 2021’s meme stock frenzy, before steadily declining. Meme stocks are popular in part because they can result in a big win over a short period of time. Buying up cheap shares to have them skyrocket in price results in a large payout.
Terms connected to meme stocks
In May 2024, Nokia was one of a handful of meme stocks to justforex review: is justforex a reliable forex broker be revivified by Keith Gill’s return to X (formerly Twitter). Prices rose 11.27% in the month to 16 May, topping $4 before settling back to around £3.90. In January 2021, Nokia’s share price jumped 106%, causing a short squeeze. Like GameStop, however, its price subsequently declined, settling around the $4 mark by late 2022.
Gill, who previously worked in marketing at an insurance firm, posted an image of a man leaning forward in his chair, a meme that is used by gamers to show that things are getting serious. Most providers offer a dashboard where you can view the total value of your portfolio, and a breakdown of how each investment has performed. The company saw sales decline when it failed to keep pace with rapidly evolving smartphone technology in the late 2000s and early 2010s.
While the companies themselves have not performed well in recent years, all three stocks went viral on a popular Reddit forum, and saw massive price hikes in early 2021, specifically on January 27. BlackBerry’s stock more than tripled, while AMC increased by nearly tenfold. But neither saw the same viral growth of GameStop, whose share price increased by hundreds of dollars in a matter of days. Providing access to our stories should not be construed as investment advice or a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction by Forbes Advisor Australia.
So-called meme stocks became a hot investment theme for day traders and retail investors early in 2021, resulting in short squeezes on hot stocks at the time such as GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC). Named 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. The information provided by Forbes Advisor is general in nature and for educational purposes only. Any information provided does not consider the personal financial circumstances of readers, such as individual objectives, financial situation or needs. Forbes Advisor does not provide financial product advice and the information we provide is not intended to replace or be relied upon as independent financial advice. Your financial situation is unique and the products and services we review may not be right for your circumstances.
What Is MOMO (Momentum) Trading?
“The hype of meme stocks is generally not based on changes in the underlying company’s fundamentals of financial performance,” wrote Britannica Money, but in messages on social media. A meme stock is one whose trading activity is pumped up via social media—particularly on Reddit, X, and YouTube. The use of memes, which are tweaked images, videos, text, etc., is limefx a central component of how the usually positive reviews of these stocks are copied and spread across the internet.
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.
Memes gained increasing prevalence and relevance as the internet and social media grew. They allow people to rapidly spread humorous, interesting, or sarcastic videos, images, or posts to others around the world. The rapid and multiplicative effect of sharing such posts could make them go viral. These firms have been generally unloved by most mainstream investors, as reflected in their previously desultory share prices.
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- Robinhood and Webull are two popular trading platforms for active investors, boasting easy-to-use mobile investing apps.
- Memes gained increasing prevalence and relevance as the internet and social media grew.
- And while this iteration of the meme stock craze lasts, you may want to brace for more volatility among these stocks.
- Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff.
This demonstrated the collective power of retail investors, and led to the coining of the term ‘meme stock’. As a result, short sellers were forced to choose between buying the stocks back at increased prices or waiting out a fall in Forex returns price. The resulting millions lost by marquee-name banks and hedge funds immediately drew scrutiny to the phenomenon of meme stock trading.
What are meme stocks?
AMC was on the verge of bankruptcy due to the pandemic, but a few short squeezes saved the company. The company is still trying to hang on as the pandemic continues, but the stock has erased most of its gains over the past year. But other than those, nostalgic meme stocks include names like Blackberry, Bed Bath and Beyond, and Nokia.
The saga triggered an investigation by the US Securities and Exchange Commission (SEC), and Hollywood even made a movie about it. 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. In true viral fashion, meme stocks rapidly became a thing in the early part of 2021. If you enjoy the thrill of playing in the big league of the stock exchanges with a group of like-minded individuals with money to spare, this can be worth the ride. And if you are a FOMO-type person, you may enjoy being part of the action.