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. Retail investors are also likely to remain keen to pick up on the latest meme stock. Dominated by younger investors, meme stocks are still seen as a way to generate outsized returns in a short period, especially in the face of rising housing costs and inflation in general.
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Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. Part of the motivation behind the online support for certain meme stocks comes from hedge funds’ short positions in those companies.
Regular stocks vs. meme stocks
However, the stock fell steeply following the company’s announcement of the plan. The renewed meme stock rally also extended to other companies, such as AMC Entertainment, which saw its stock price jump 120% in tron price today, trx live marketcap, chart, and info early trading on Tuesday. AMC took advantage of the heightened interest by raising approximately $250 million through a share sale. However, short squeezes aren’t legal when they’re the result of an intentional plot or scheme, according to the U.S.
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- A meme stock is an actual stock that represents a share of a company.
- “It’s just like wearing the trendiest clothes or knowing the latest viral challenge, people use social media as a way to connect and get views,” said Giles.
- It’s fun to dream about finding an easy shortcut on the path to economic prosperity.
- “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.
- Any investment comes with a degree of risk, but meme stocks can be especially risky and volatile.
Investopedia reports that Single Stock ETFs have been introduced to provide “leveraged long or short positions” on meme stocks like Tesla. Investment Plans (“Plans”) shown in our marketplace are for informational purposes only and are meant as helpful starting points as you discover, research and create a Plan that meets your specific investing needs. Plans are self-directed purchases of individually-selected assets, which may include stocks, ETFs and cryptocurrency. Plans are not recommendations of a Plan overall or its individual holdings or default allocations. Plans are created using defined, objective criteria based on generally accepted investment theory; they are not based on your needs or risk profile. You are responsible for establishing and maintaining allocations among assets within your Plan.
All investments carry a certain level of risk, some more than others. You’ll also want to make sure that your decision to buy a meme stock isn’t driven by FOMO (fear of missing out). instaforex overview That’s a type of emotional buying that may cause you to make decisions you’ll regret. So if you sell the stock you borrowed for $10, and then its price rises to $50, you’re responsible for those shares, meaning you’re on the hook for that $40 you owe the broker.
best-performing meme stocks
The YouTube persona Roaring Kitty posted a future viral video laying out the case for why shares of brick-and-mortar video game retailer GameStop Corp. (GME) could soar from $5 to $50 per share in August 2020. As the stock price increases, investors — in this case, hedge funds and Wall Street investors — with short positions experience increasing pressure. However, the higher the stock price becomes, the more money they stand to lose. Additional information about your broker can be found by clicking here. Public Investing is a wholly-owned subsidiary of Public Holdings, Inc. (“Public Holdings”).
Short selling is when somebody sells shares that they do not own, hoping to buy them back at a lower price. That seller must borrow shares from somebody who is long the stock in order to sell them. As more and more shares are sold short in this way, there are fewer shares left available to borrow. Once a stock becomes hard to borrow, even the most motivated short seller may be unable to do so.
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. To participate, you need to be connected to the relevant social media sites. Also, no research or knowledge of the stock market or the company you invest in is required. If gambling or speculating, rather than investing, is your idea of accumulating wealth, then buying meme stocks is the way to go. Risking money in speculative investments can be exhilarating, but it is rarely the path to long-term wealth.
In general, many of the meme stocks that saw sky-high stock prices in 2021 have come down significantly in 2022. They are often now trading below where they started before the meme frenzy. Others, notably GameStop, remain elevated, although still far lower than its all-time highs. Single stock ETFs have also recently been introduced, which provide leveraged long or short positions on a single stock.
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). Investing in meme stocks may feel like a way to get something out of social media, but before you proceed any further, make sure you know the risks. Buying meme stocks isn’t investing; it’s trading, and it closely resembles gambling from multiple angles. Trading meme stocks might get emotional for you in unexpected ways.
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 differences between enterprise architects solution architects and technical architects on the cash they hold.