Unfortunately for Apes, GameStop and AMC have lost most of the gains they made during the squeezes. The key to being an Ape is having diamond hands, which means you hold the stock until the MOASS or Mother of All Short Squeezes occurs. While the cause might be admirable, these traders have also lost out on massive gains.
Are Meme Stocks Always A Short Squeeze Play?
To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive payment from the companies that advertise on the Forbes Advisor site. Access and download collection of free Templates to help power your productivity and performance. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. GameStop followed suit in 2021, raising nearly $1.6 billion via a secondary offering of 8.5 million additional shares at an average price of about $200 per share. The meme universe’s participatory nature means it isn’t just passively consumed, it’s actively reimagined. Kids may imitate the voices, invent new characters, or incorporate phrases into everyday conversation.
- Funds that track the S&P 500 are generally an effective way to earn a good return on your money over time.
- GME’s share price increased over 150% within a week based on some vague posts on social media platform X by a leading figure behind the GameStop short squeeze, Keith Gill, also known as ‘Roaring Kitty’.
- The meme stock community can build considerable clout around a share through online conversation on sites like Facebook, Twitter and Reddit.
- In May 2024, Nokia was one of a handful of meme stocks to be revivified by Keith Gill’s return to X (formerly Twitter).
- The very first one is called the Alexamenos graffito and is likely meant to mock early Christians in Rome.
- Looking to turn some of that extra free time into money, many people turned to the stock market and social media for ideas.
What is a ’short squeeze?‘
- Similarly, the Shiba Inu coin’s rise in 2021 was fuelled by viral buzz as new retail investors piled in, inspired by stories of tiny investments turning into millions.
- Some meme stock investors make big profits, but many don’t—because perfectly timing when you buy and sell stocks to make money is often tricky.
- Another famous example of him using his influence to drive prices was when he tweeted that Tesla stock is overpriced which got him into hot water with the SEC and prompted him to hire an ex-SEC lawyer.
- Meme coins are fun, loud and full of swagger—but they aren’t built for long-term value.
Like all investments, buying stocks comes with a risk you’ll lose your capital. If short-term wealth generation is the goal, it’s unwise to be cavalier about splashing your cash based on a social media frenzy. The GameStop short squeeze demonstrated the powerful solidarity that online communities can elicit—and how it can be harnessed to affect real-world outcomes. 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.
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Less than two years later, after the initial meme stock craze had largely died down and in true meme stock fashion, Roundhill announced the closure of the Meme Stock ETF. According to media reports at the time, the reason for the closure was lack of interest from day traders and too little trading volume. In late January 2021, regulators began monitoring trading activity for meme stocks. Concerned about potential market manipulation and overall stability in alvexo forex broker the financial markets, the U.S.
The ape imagery is particularly important as “ape” is a self-moniker of meme-stock investors. A more modern example of trickle-down stocks-related memes comes in the form of Elon Musk. The man is a bit of a master of weaponizing memes to drive traffic his way. He is famous, interesting, successful, and often seen as a visionary. While people might doubt a stellar review you give yourself in an ad, they are far more likely to be receptive to a more vague, yet emotionally charged message.
Pros of meme stocks
The good news is that meme stocks come from all nooks and crannies of the stock market, so it’s possible to build a diversified portfolio of holdings that can catch a tailwind from various places. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. 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. 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.
Some countries are moving towards tighter controls, while others still lack frameworks that address meme coin speculation. In the United States, watchdogs have signalled growing concern, especially with the sitting president linked to a controversial meme coin. That being said, What is NASDAQ with all the absurdity of many of these tokens it is interesting to see that it also represents a democratization of a sort.
Short Percentage
But all bubbles tend to burst, causing prices to drop suddenly, meaning you could make a loss or be left holding the bag if you don’t sell at the right time. Of course, many ordinary investors were drawn into the short squeeze by the idea of making a profit from driving up GME’s share price. On the other hand, while they are certainly big news now, there are no guarantees they will truly remain. What is certain to remain, however, are the underlying mechanisms of marketing, psychology, and public opinion molding we have discussed here.
Another famous example of him using his influence to drive prices was when he tweeted that Tesla stock is overpriced which got him into hot water with the SEC and prompted him to hire an ex-SEC lawyer. Due to their very nature, memes can influence us profoundly both on a conscious and subconscious level and lend themselves well to marketing, propaganda, and opinion-shaping. This means that they, among other things, have always had great power to influence our purchases both in the supermarket and on the stock market. Many trades for under a penny each, so you can theoretically amass millions of coins for a small price.
There are conflicting thoughts on what a meme stock is in the investing community. The cleanest definition that checks all boxes is a stock with a following on social media and amongst retail investors who use social media to discuss investing. It seems vague, but that is because meme stocks have encompassed various companies over the last year.
Meme Stocks: What Are They and How To Buy Them
An important feature of meme stocks, as far as the mainstream definition is concerned, is that they tend to be overvalued. We can’t really argue this notion when it comes to GME, AMC, and similar crazes, but don’t believe it is definitively true when we look at the broader relation between memes and the market. Each day our team does live streaming where we focus on real-time group mentoring, coaching, and stock training. We teach day trading stocks, options or futures, as well as swing trading. Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to How much does a forex trader make “Talking Heads” on social media or tv.
Our chat rooms will provide you with an opportunity to learn how to trade stocks, options, and futures. You’ll see how other members are doing it, share charts, share ideas and gain knowledge. Other popular meme coins include Shiba Inu Token and any coin that has the name of Musk’s dog, Flloki, in the name.
Gill made no mention of GameStop or any other company in his posts, but his reappearance on X – previously known at Twitter – was enough to spark fresh investment that saw GameStop’s price rise by over 74% in a single day. On 13 May, Keith Gill – better known by his social media handle, Roaring Kitty – posted to X for the first time in three years. The former financial analyst is a YouTuber, livestreamer and Reddit user, whose backing of GameStop helped propel the share’s popularity. As a result, in the second quarter of 2021, AMC raised over $1.2 billion from the meme stock frenzy, staving itself off from any near-term liquidity concerns. It’s fun to dream about finding an easy shortcut on the path to economic prosperity. There’s a slim chance you could get there with a winning lottery ticket, a rich uncle you didn’t know about, or a killer meme stock trade in which you happen to get in (and out!) at the right time.