“The big risk with the meme stock investing is that it’s all based on the whims of the crowd,” he adds. And David Trainer, CEO of investment research firm New Constructs says a “pump-and-dump scheme” is a fair way to characterize what’s going on here. 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. And if the stock price rises to $500, you’ll owe that difference.
Food and Drug Administration (FDA) sent the company a Complete Response Letter for obeticholic acid (OCA) as a treatment for nonalcoholic steatohepatitis (NASH). To boot, it’s had a more stringent black-box warning added to Ocaliva, wealth by virtue an approved treatment for primary biliary cholangitis. But what might scariest of all is that the company’s balance sheet gives no indication that it’s putting its cash to work on research and development. The entire EV space (cars and ancillary products/services) is dependent on innovation.
In recent years, the meme stock trade hasn’t reached the fever pitch that it did back in the winter of 2021. All of these same stocks that surged in value in the wake of the initial meme stock craze have fallen quite substantially in price from their peaks. GameStop, for example, reached a multiyear low near $10 per share in April 2024. For example, one of the most prominent meme stock promoters is known by his social media handle Roaring Kitty. He is largely attributed as being an originator of the meme stock trend from posts on Reddit and other social media platforms covering companies like GameStop (), AMC (), and some others. His Reddit posts in particular for GameStop, which is widely considered the first meme stock, began attracting a small following of investors in the summer of 2020.
Overlooked AI Stocks to “Buy the Dip”
- If you own a stock with these types of characteristics, it doesn’t mean that they will become part of the meme stock trade.
- “We’re running out of new money available to jump on the bandwagon.”
- It’s been more than 4 years since meme stocks emerged in the midst of the global pandemic.
- Data like volume and short interest can help spot good meme candidates.
If you buy too late, just before the crowd decides to move on, you can end up losing big as the stock plunges back down towards its pre-meme value. Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice.
Meme stocks should have social media buzz, a huge rising volume and a small float. That could mean the latest surge in stocks such GameStop and AMC could be shorter and reach less dramatic heights than in 2021. 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. In early January 2021, GameStop was trading near $5 per share. At its peak in June 2021, GameStop nearly reached $60 per share.
Intercept’s beta is north of 1.5, which means that, on average, it moves more than 50% more than the broader market. For example, if the benchmark S&P 500 rises 1%, we would expect to see Intercept up more than 1.5%. The other catalyst, as you might expect, is the right recipe for a short squeeze. As of May 28, a little over 7.8 million shares of the company were held short. That may not sound like much, but Dave & Buster’s only has 42.4 million shares in its float. Even though retail investors have been putting their money to work in the market for more than a century, we’ve never before seen their efforts to drive up most profitable investment the valuations in equities translate to such impressive results.
Below are the five best-performing stocks in the Solactive Roundhill Meme Stock Index, ordered by one-year returns. Conversations on Reddit about highly manipulated stocks tend to evaporate quickly and seldom repeat, but several meme stocks have loyal, fervent fanbases. The first telltale sign of meme stock manipulation are sudden spikes in posts about a stock that disappear as quickly as they come, Rehl said.
Featured Articles and Offers
GameStop’s miraculous surge began in January 2021 after Ryan Cohen, the founder of online pet-store company Chewy, joined the company’s board and inspired optimism among investors. Cohen could spearhead GameStop’s e-commerce efforts and help the company get back on track, investors believed. Meme stocks have no precise definition, but they’re not hard to spot.
As the smoke clears and the stock market recovers in 2023, retail traders wonder what the next meme stock will be that spawns another meme stock mania. Part of the motivation behind the online support for certain meme stocks comes from hedge funds’ short positions in those companies. Believing they could drive the value of the stocks higher by squeezing those short positions, Gill outlined a path in an August 2020 YouTube video that could send GameStop shares from $5 each to $50 or above. Gill and activist investor Ryan Cohen were key figures in motivating a community of online traders from the WallStreetBets subreddit to buy and hold shares of GameStop, running up their price. A meme stock is one whose trading activity is pumped up via social media—particularly on Reddit, X, and YouTube.
Fidelity Smart Money℠
One of the biggest threats is the potential for graft-versus-host disease (GVHD), where the donated T-cells attack the patient’s healthy cells as it views them as foreign. ALLO shares reached a high of $55 in May 2020 and fell to a low of $4.30 in June 2023. If getting rich off meme stocks were easy, thousands of Redditors would be millionaires.
Our Services
Below is a comprehensive breakdown of Insider’s coverage of the meme stock movement and how investors can profit from it. Even if this isn’t necessarily a deliberate fraudulent scheme, there are big drawbacks to jumping on the meme stock bandwagon. If you don’t have any sort of underlying fundamental anchor or connection to a real business model or valuations, you’re taking huge risks, Trainer says. GameStop may have started the meme stock mania, but others have followed in its footsteps.
Let’s dive into the latest in the land of meme stocks and why it might matter for you. Allogenic CAR-T is also called “off-the-shelf,” where other T-cells are donated rather than a patient’s, allowing for speedier and more consistent treatment. It’s also beneficial for cancer vz stock news and research articles patients with low or unhealthy T-cells.
It also has the best stock symbol AI when AI integration and usage is a major tailwind. AI shares peaked at $183.90 in December 2020 before selling off to a low of $10.16 in December 2022. The short interest climbed on a bearish report released by Hindenburg Research, which sent shares falling by nearly 40% before surging through its yearly highs, peaking at $48.87 in June 2023. In this article, we will review six stocks that could be the next big meme stocks leading the resurgence of the meme stock craze. By definition, investing in meme stocks is incredibly risky, and poorly-timed trades can lead to massive losses.
Stock manipulation on Reddit surged in May, Rehl said, adding that it took time for spammers and bots to learn the intricacies of investing subreddits’ rules and find loopholes. Reddit’s WallStreetBets page bans users that post “false or misleading information” and promoters of “any other worthless securities that are susceptible to scams or pump & dump schemes.” Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.