Are Meme Stocks Here To Stay?

Whether you like to admit it or not, memes are irrefutably a huge part of the ever-expanding social media landscape. But what exactly do memes have to do with the stock market? The short answer is “Meme Stocks,” and the question is, what exactly are they, and how did they come to be? This article dives deeper into the intricacies of meme stocks, their history, and more.

Meme written with Scrabble blocks

TL;DR 

  • Memes: Refers to viral images, phrases, or trends that spread online, often through social media.

  • Meme Stocks: Stocks of companies that gain popularity online, particularly on platforms like Reddit, leading to sudden price increases and volatile trading.

  • Origins: The meme stock movement started in 2020, with GameStop being the first major meme stock that gained attention through the Reddit community.

  • Fluctuations: Meme stocks are highly volatile—prices can soar and plummet quickly based on online buzz.

Memes: A Brief Description

Traditionally, memes refer to particular catchphrases or concepts. However, the term has recently become more multifaceted than it was in the past. To put it simply, memes refer to an abstract notion, image, or style that spreads or becomes viral over the internet and social media platforms. In essence, memes are an appropriation of social settings in that they utilize elements of popular culture like shows, trends, music, and social norms. Memes are one of the pillars of the internet field and can be spread from one person to another via emails, news, blogs, articles, and social media platforms. 

What Are Meme Stocks?

In brief, meme stocks are shares of companies that have gained attraction and fame online and on social media networks like Reddit, Facebook, Twitter, and Instagram, among others. Posts online surrounding these stocks can generate a lot of traffic and increase trading activity. On the flip side, however, it can also lead to tangible short squeezes and crashes in the most shorted meme stocks. In other words, while hype may brew around such stocks causing them to ascend in value, they can also become overvalued and drop rapidly afterward. Nonetheless, the same meme shares can also remain up for relatively prolonged periods of time due to members of the meme stock community keeping their prices up. Moreover, the term "Stonks" is used often in memes to indicate vague understandings of financial transactions or flawed financial decisions. 

What Started the Meme Stock Movement?

Meme stocks, as we know them today, are a relatively new concept in the market. Initially, the hype surrounding the latest meme stocks emerged in 2020 from the Reddit forum, an online hub discussing trading using irreverent and controversial undertones. The first meme stock company that made remarkable headlines on that forum was the video game mogul GameStop. In January 2021, the video company soared and turned heads as it led Wall Street hedge-fund short-sellers to incur up to millions of bucks in losses. (Source: Al Jazeera)

Is Tesla Still a Meme Stock?  

With some meme stock investors and enthusiasts referring to it as the “king of meme stocks” and the “original” meme stock, on the one hand, and other traders adopting bearish sentiments towards it, on the other hand, one is left wondering whether or not Tesla (TSLA) is still a meme stock. However, since meme stocks’ popularity constantly fluctuates, the answer to whether or not Tesla is one is not that straightforward. 

Conclusion

Meme stocks might be controversial and dynamic; whether this trend will stick with us is yet to be determined. In the meantime, meme stocks are here to stay, and the list of meme shares keeps expanding and changing. Investors will have to wait and see how this plays out and whether or not it will prove successful. 

FAQs:

1. What are meme stocks?

Meme stocks are shares of companies that gain attention on social media platforms, leading to price surges or volatility. These stocks are often popularized by communities on Reddit, Twitter, and other platforms.

2. How did meme stocks start?

Meme stocks gained traction in 2020, particularly with GameStop, when users on Reddit organized to push the stock’s value higher, disrupting traditional Wall Street short-sellers.

3. Is GameStop still a meme stock?

Yes, GameStop continues to be considered a meme stock, especially after periods of hype fueled by social media posts.

5. Are meme stocks a good investment?

Meme stocks are highly volatile and speculative, with potential for quick gains or losses. Investors should be cautious and aware of the risks associated with these types of investments.

6. Will meme stocks continue to exist?

While the future of meme stocks is uncertain, they remain a part of the current stock market culture and may continue to evolve with social media trends.

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