Some investors made the theater operator AMC Entertainment a meme stock. Some joined new crazes, such as cryptocurrencies, nonfungible tokens and other assets more or less immune from the traditional investment fundamentals such as revenues and profits and business plans. AMC fights a losing battle against debt and industry decline, while DJT trades on political sentiment rather than business fundamentals. Both can generate massive short-term gains for traders who time their entries and exits perfectly, but neither offers a compelling long-term story. Meme stocks are often identified by their rapid popularity and discussions on social media platforms and online forums such as Reddit’s r/WallStreetBets or 4chan.
Reading Social Sentiment
One was the pandemic and its attendant lockdowns, which prompted people deprived of social contacts and customary entertainment pursuits to fill their empty hours day-trading stocks. Internet influencers goaded their followers into trading in concert with the goal of putting it to the Man — i.e., rich Wall Street hedge fund managers who were shorting unloved stocks and deserved to be taken down a peg. The stock had surged by more than 1,400% in the four days through Oct. 22, when shares hit an intraday peak of $7.69, up from a low of 50 cents on Oct. 16. After seeing some investors bragging on Wall Street Bets about getting winning trading advice from ChatGPT, we decided to test the AI’s knowledge of the market’s speculative frenzy. GameStop has the financial stability to attempt a genuine transformation, though the clock is ticking on proving it works.
Learning Opportunity for New Traders
- More than anything, meme stocks are a reflection of a market transformed by technology, social media, and retail empowerment.
- Tesla maintains its $775.7 billion market cap with $15 billion in annual profits, while GameStop and AMC both post negative earnings and fight to stay relevant.
- While some investors may experience substantial gains in a short period, there’s also significant risk of losing money.
- Other names like Bed Bath & Beyond, BlackBerry, and Nokia briefly joined the movement, showing how quickly viral stocks could rise and fade.
- Consequently any person acting on it does so entirely at their own risk.
The result was a wave of unpredictable stock rallies that challenged everything investors thought they knew about value, risk, and logic. The next generation of meme stocks is brewing in the margins, waiting for the right combination of social media buzz and market catalysts to explode into mainstream consciousness. Smart traders know that by the time a stock hits the front page of WallStreetBets, the easy money has already been made. Most meme stocks have seen their share prices stabilize at values far below their peak and much more closely aligned with their fundamentals. The magic wasn’t sustainable, but it was real—and it permanently changed how markets work.
- Not everything about meme stocks is negative, there’s a reason investors are drawn to them.
- Within days, message boards like Reddit’s WallStreetBets, Discord servers, and X (formerly Twitter) were flooded with coordinated buying strategies and meme-laced optimism.
- Second, the return of Keith Gill, better known as “Roaring Kitty,” sparked a viral wave of nostalgic enthusiasm.
- L.A. Times Insights delivers AI-generated analysis on Voices content to offer all points of view.
While efforts to recreate that speculative mania of yore continue, the results have been sporadic and unsustainable, and the stock has largely languished ever since. Vanda also noted many hedge funds have learned from 2021 and are likely better prepared for short squeezes today. AMC’s stock closed Tuesday at $6.85 and has risen 135% since Friday, but it’s a far cry from its all-time highs above $300 set in June 2021. This written/visual material is comprised of personal opinions and ideas and may not reflect those of the Company. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions.
Beyond Meat is just the latest company to enjoy sudden meme-dom, followed by an equally sudden dose of reality. In Beyond’s case, the surge came in the wake of its Oct. 13 announcement of the results of a debt swap deal that will massively dilute the stake of shareholders. Short sellers piled into the stock, setting up the momentary rebound typical of meme stocks. The appetite of small retail investors for what beckon as big scores in unloved stocks has remained strong since the meme stock trade attracted attention during the pandemic year 2021. AMC remains the poster child for how meme stock fame can’t fix broken business fundamentals.
The term “meme” stock comes from the internet phenomenon of memes, which spread rapidly online, much like the virality of these stocks. Third, short interest in some of these legacy meme names remained elevated, setting the stage for another classic short squeeze. With hedge funds and institutional players still betting against fundamentally weak companies, retail traders saw an opportunity to repeat the playbook of squeezing short sellers and capitalizing on volatility. First, retail trading platforms saw a surge in new account openings at the start of 2025, coinciding with stimulus policies aimed at easing consumer strain during a period of stagflation Forex calendar news risks.
Our list is updated every five minutes, ensuring that you have access to the most current information. If you’re a retail investor caught between FOMO and fear, the best approach is clear-eyed risk management. Meme stocks can offer big upside—but they are not investments in the traditional sense. Platforms now offer fractional options, community tools, and embedded education features. Finfluencers, live streamers, and YouTube analysts provide constant market commentary, making meme stock movements feel like participatory entertainment more than passive investing.
The options volume in meme stocks often exceeds their underlying shares, creating a feedback loop where price moves are detached from any company-specific news. What’s different this time is that many retail investors are more experienced, more data-savvy, and more strategic. This new wave of meme traders blends humor and high-risk behavior with advanced analytics, using real-time options data, short interest ratios, and AI-powered sentiment analysis tools to make decisions.
Geopolitical Shockwaves! Which 3 Sectors Will Be the Focus of Tomorrow’s “Catalyst Trades”?
The investment thesis writes itself—if meme trading is here to stay, why not own the casino? Robinhood has expanded beyond commission-free stock trades into credit cards, crypto, and retirement accounts, building a financial ecosystem that captures more revenue per user. The platform that democratized trading is now democratizing wealth management. GameStop occupies a strange place in financial history—the stock that launched a thousand memes and destroyed a few hedge funds along the way. The company has spent the last four years trying to prove it’s more than a retail trading experiment, and the results are mixed but intriguing.
It’s essential to do thorough research and consult with a financial advisor before considering any investment. However, they expressed doubt that the latest meme stock craze could reach 2021 levels in the days to come. “Do we think more retail traders can jump in on the trend in the coming days? Yes. Do we think this is a repeat of 2021? No, and the chances we reach that stage are low.” This volatility-driven investing creates opportunities but also exposes traders to rapid losses. Online communities create a sense of unity and shared purpose, giving retail investors a platform to exchange insights and challenge institutional narratives. These trading psychology factors such as excitement, belonging, and rebellion, help explain why meme stocks thrive despite obvious risks.
Diversification and Risk Control
Supporters view meme stock participation as offering legitimate opportunity alongside risk, suggesting that traders can capture genuine gains when properly timing their entries into these volatile securities3. In 2025, retail traders are using zero-day options (0DTEs) at unprecedented rates. These short-dated contracts offer massive upside potential for a small premium, turning stocks like GameStop into volatility-driven slot machines. When millions of traders buy bullish call options, it forces market makers to hedge by purchasing the underlying stock—creating a gamma squeeze that drives prices even higher.
Earnings Season Turbulence: Which “Unexpected Factor” Could Disrupt Tomorrow’s Rotation Code?
That power isn’t disappearing—it’s just becoming more strategic, more data-driven, and more integrated into how modern markets actually function. Use position sizing, stop-loss orders, and options hedging if you engage with meme names. Avoid overexposure and remember that past gains are not indicators of future performance. Watch social sentiment indicators, options volume, and short interest to anticipate volatility. In one scenario, meme stocks fizzle out again as retail enthusiasm wanes and macro pressures reassert themselves. Rising interest rates, stagflation, or geopolitical shocks could drain liquidity and crush high-beta trades.
With the companies’ profits declining, a number of large hedge funds had taken up short positions on these companies, essentially betting that their business models would eventually fail. Once online attention fades, trading volume drops, and prices often return to levels aligned with company fundamentals. Over the past three years, most meme stocks have seen their share prices stabilise at values far below their peak and much more closely aligned with their fundamentals. However, Pandora’s Box has been permanently opened — the pandemic, which saw millions of people stay at home, created the perfect environment to open up the stock market world to more investors. Our meme stocks list is created by analyzing social media discussions, particularly on platforms like Reddit and 4chan. We track mentions and sentiments about different stocks to identify which ones are gaining traction as meme stocks.
If that same company announces a partnership or beats earnings while social sentiment is positive, you might have found your next multi-bagger. If you’re already hearing about it from your barber or seeing it trending on Twitter, you’re probably too late. You can now track which stocks are gaining momentum before they break out, monitor institutional response in real-time, and even predict which direction the retail army will march next. Gone are the days when a single Reddit post could move a stock 400%.
The Reality Check
What is a meme stock, and why did names like GameStop and AMC shake Wall Street? These are stocks that soared not because of earnings or innovation, but because the internet decided they would. Then, as if out of nowhere, the stock got noticed by online investment promoters, who urged followers to buy GameStop shares to hurt Wall Street short sellers, who were betting that the stock would keep falling. The emblematic meme stock of 2021 was GameStop, a spavined mall-based video game retailer that was struggling through the transformation of its franchise from brick-and-mortar stores to online commerce. The company had lost a combined $1.36 billion from 2018 through 2020, and its future looked bleak.
Robinhood represents a pure play on the meme trading phenomenon itself, which could be brilliant or circular depending on how the market evolves. DJT represents everything absurd about modern markets condensed into a single ticker symbol. Truth Social generates less than $5 million in annual revenue while the company trades at a $5 billion enterprise value—a disconnect so extreme it makes GameStop’s 2021 peak look reasonable by comparison. Tesla exists in a category of its own—a legitimate meme stock that actually makes money. While most meme darlings burn cash and hope for the best, Tesla generated $15 billion in net income last year with a 14.4% net margin that would make traditional automakers jealous.