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In this series, we break down the jargon and explain a popular investing term or topic. Here are the meme stocks.
Why do I suspect these may not be the stocks for me?
You would be right, if you are cautious. This is dangerous territory for investors.
Meme stocks are stocks that gain a cult following thanks to social media platforms like Reddit. These stocks may have little intrinsic value, but this doesn’t stop their prices from skyrocketing or “going to the moon,” as stock meme lingo would say.
Among followers, there is particular rejoicing if this affects Wall Street professionals who have been “short” the stock, calculating that its price will fall. A meme is an image or information that spreads quickly over the Internet.
When did this all start?: The meme stock craze made headlines in January 2021 when YouTuber Roaring Kitty began posting about Gamestop, a declining American games retailer.
When did all this start?
The meme stock craze made headlines in January 2021 when YouTuber Roaring Kitty, aka Deep F***ing Value, aka Keith Gill, began posting about Gamestop, an American gaming retailer in slope.
At the beginning of the month the shares were trading at $17.25. By the end of the month, they had shot up to $500.
This was due to lockdown boredom, interest in the Reddit Wallstreetbets flow, cash from government stimulus checks, and the ability to trade on the Robin Hood app.
Does this sound like a movie script?
It’s funny you say that because the Gamestop story, which captured worldwide attention, was actually made into a movie, Dumb Money. It is also chronicled in a Netflix documentary, Eat The Rich.
What were the other big meme stocks of 2021?
AMC Entertainment, a film group whose shares rose 1,134 percent in 2021 to $147.3. Its current price is $4.55. Blackberry, the software group, followed a similar trajectory, “going to the moon” in 2021, reaching $14, but falling back to $2.45.
Investors with names like ‘Iknowthecodings’ and ‘WSBGod’ are said to have turned small bets into fortunes, but thousands mistimed them and thus lost big.
Why are we reading this now?
Because Roaring Kitty is back on the scene this month. Following a post on the X/Twitter platform, Gamestop shares jumped from $17 to $78.
Shares may now be back to $18, but enthusiasm appears to have been rekindled.
A lucky few can make money, but they only do so by taking big risks. The meme stock crowd tends to talk less about their losses than their gains or “trends.” This is slang for “pulled chicken.”
Are there other meme stocks?
The list includes Donald Trump’s Trump Media and Technology, which operates the social media platform Truth Social; His shares are up 150 percent this year.
Other notable names include Hims & Hers Health, which sells weight-loss drug injections for $199 a month, and Robinhood Markets, the Robin Hood app company.
Common meme language seems colorful: any other examples?
BTFD stands for ‘Buy on the Damn Dip’, i.e. buy when the stock price is low.
Diamond hands indicate an investor’s willingness to hold a stock, regardless of losses. Paper hands indicate a willingness to sell.