What differentiates a meme stock from a regular stock?
Definition: Meme Stock
A stock that has following characteristics is considered a meme stock. Meme stocks are popular among younger adults, trending in online forums, and typically have high volatility.
It is uncertain when the term meme stock rose to popularity. However, it coincided with a few different social events. The rise of online investment forums, especially Reddit, contributed to the invention of meme stocks. Zero cost trading apps geared towards younger investors also contributed to the meme stock phenomenon.
The definition of a meme helps to understand. A meme is an element of a culture or system of behavior that may be considered to be passed from one individual to another, especially through imitation. By this definition, a meme stock can be considered a cultural movement, as was the case with GameStop and other stocks that rose to popularity.
Several consider meme stocks to be a bad investment, but that is not always the case. Some meme stocks have good fundamentals and are gaining natural investment growth. Retail investors tend to fomo and drive the price up to overbought territory when a stock is frequently discussed online. When the stock dips, these same investors have the tendency to panic sell.
Some of the early meme stocks were Tesla, AMD and GameStop. When app investing interest peaked in younger adults, BlackBerry, AMC and Nokia were added to the group. Today there are new meme stocks gaining popularity every day and week.
Really a meme stock is an asset that has gained popularity online among younger investors, which leads to higher volatility.
Even major investment news and websites track meme stocks. Retail investing and meme culture is here to stay and has become a part of the market.
”I cracked the code to the meme stock moon cycle.”
“XYZ looks like a meme stock, but it is actually a solid company with massive upward potential.”
“Everyone stop FOMO buying into meme stocks!”