Meme Investing & Stocks: The What & The How!
‘Memes’ are pretty great. We all enjoy them, as often they spread a viral cultural element with a humorous tone in it. However, nobody would have ever expected the word ‘meme’ and ‘investing’ to be associated together before 2020. But just like with anything else in the world; there is nothing certain or permanent. Thus begins the era of ‘meme investing.’
What is Meme Investing?
Meme investing or meme trading is the act of buying and selling shares of a company with the intention of making very short-term gains propelled by mass hysteria surrounding the share. These shares are called meme stocks.
A large purchase or sale of stocks of a company can influence its trading trends in the stock market. For example, when the world-renowned investor Warren Buffett invests in a certain company, this brings a lot of attention towards this company and the stock by other investors. Warren Buffett is known to make sound investing decisions and following trading patterns of such figures is a known form of investing.
Warren Buffett goes in for the long run, though. So, there are no short-term gains following his trading patterns. Hence, this does not qualify as ‘meme investing.’
The recent surge of meme investing came to be on popular social media platforms such as Reddit and Twitter. Instead of following some renowned investing prodigy, millions of individual investors rallied around each other. And the power of millions of individuals is much more than anything Warren Buffett or big mutual fund investors could amass!
When millions of individuals communicate on these social forums, they can manipulate the market prices of shares in the direction they want to.
What is a Meme Stock?
A company’s stock that undergoes this massive market price manipulation by individual investors rallying on social media networks is known as a meme stock.
These meme stocks have some common traits. They are usually overpriced since the meme trading manipulates the stock’s real value. These stocks show recent spikes in volatility as millions of traders buy and sell millions of shares. Meme stocks are popular among the young investors looking to make a quick profit than invest in the company looking at its fundamental growth potential over the years to come.
What are Popular Meme Stocks of 2021?
It is hard to say if investing became a meme with cryptocurrency or stocks. In a COVID-19 pandemic-stricken world, the stock markets plummeted and investors shifted their attention to cryptocurrency.
From mid-2020 and towards early 2021, the most popular cryptocurrency, Bitcoin rose to all-time highs. In March 2020, the price of Bitcoin was around USD 9,000. By April 15, 2021, it rose to USD 77,000. Yes, that is accurate. It signifies an increase of around 755%. This is unnatural. However, this glory rubbed off of Bitcoin’s counterparts such as Dogecoin–a cryptocurrency developed purely as a meme!
On December 30, 2020, the price of Dogecoin was USD 0.005686. By May 6, 2021, the price rocketed to USD 0.6848! This represents a growth of 1,195%, destroying Bitcoin growth.
Naturally, this trend spilled over to stock markets, too. Big corporate investors were hunting stocks for short-selling, and Reddit investors rallied against the giants. It truly was a battle between David and Goliath!
Some of the top/popular meme stocks right now are;
| Company Name/Stock | Jan 1, 2021 Price (USD) | June 11, 2021 Price (USD) | Peak Price (USD) | Growth at Peak (USD) |
| 1. AMC Entertainment Holdings, Inc. (AMC) | $2.01 | $49.40 | $62.55 | 3,012% |
| 2. BlackBerry Limited (BB) | $6.58 | $14.18 | $25.10 | 281% |
| 3. GameStop Corp. (GME) | $17.37 | $233.34 | $347.51 | 1,901% |
| 4. Naked Brand Group Limited (NAKD) | $0.2177 | $0.7470 | $1.65 | 658% |
| 5. Bed Bath & Beyond Inc. (BBBY) | $18.03 | $31.91 | $52.89 | 193% |
| 6. Clean Energy Fuels Corp. (CLNE) | $7.83 | $10.80 | $18.64 | 138% |
| 7. Senseonics Holdings, Inc. (SENS) | $0.93 | $4.01 | $5.27 | 467% |
| 8. Nokia Corporation (NOK) | $3.89 | $5.43 | $6.55 | 68% |
| 9. Ocugen, Inc. (OCGN) | $3.07 | $6.34 | $15.81 | 415% |
Potential upcoming meme stock frenzies:
{Disclosure: investing in meme stocks is either win or lose. There is no in between. Be prepared to lose everything you have}
- UWM Holdings Corporation Class (UWMC)
- ContextLogic Inc. (WISH)
- Clover Health Investments, Corp. (CLOV)
- Cleveland-Cliffs Inc. (CLF)
- Workhorse Group Inc. (WKHS)
[All data shown here are valid as of the date of the article]
Over 10.5 million self-professed ‘degenerates’ gather on the subreddit r/WallStreetBets to determine where they are going to focus on for the day.
A big factor fueling the mass hysteria of meme stock trading is the fact that individual investors are empowered with personal investing apps such as Robinhood or Webull (in the US) and Wealthsimple Trade (in Canada) that allows commission-free trades. However, it is the responsibility of the investor to engage in responsible trading rather than the trading app.
When GME, AMC, and BB stocks were trading at massive volumes in January 2021, the Robinhood app even blocked trading of the stock within the app. This caused an outrage among the individual investors and even resulted in a class-action lawsuit against Robinhood for unlawful trading restrictions.
Meme stock trading is a dangerous game to play. You could win big or you could lose everything. There are plenty of examples for both on WallStreetBets itself.
This article was written purely to educate the investors and traders of what meme investing, meme trading, or meme stocks are. Always do your own proper research before making any kind of investment decision.
Let us hear your thoughts on the meme stock trading frenzy. Have you won? Have you lost?
