what is the next meme stock

While the number of NOK shares sold short has fallen substantially, many  meme-stock investors are still interested in the firm . If many institutional investors short Nokia again, NOK will certainly be a stock to keep an eye on. The incredible surge of GME stock last year, which took https://www.day-trading.info/ its shares from around $4 in mid-2020 to more than $480 per share in January 2021, was one of the most incredible near-term short squeezes I’ve ever seen. Investing in a single stock usually carries more risk than investing the same amount of money in several different stocks.

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what is the next meme stock

As a result, hordes of investors started buying GameStop stock, making it very expensive for the hedge funds to buy back from their short positions. Part of the motivation behind the online support for certain meme stocks comes from hedge funds’ short positions in those companies. GameStop’s stock price then surged due to a massive short squeeze affecting some major hedge funds that were short the stock and forced to sell to cut losses. As mentioned above, the stock price went from less than $5 a share to $325 (by January 2021) in less than six months.

Rather, speculation and a stampede by retail investors resulted in a tremendous rally by GME stock which was unexpected by most. While some thought that the meme stock craze would be short-lived, the phenomenon remains in force months later. Meme stock communities pumped the brick-and-mortar retailer Bed Bath & Beyond (BBBY) to extreme levels in the summer of 2022 when it was up 314% for a short period before crashing back down. Some meme stocks did not fare as well as others, even with the occasional short squeeze.

Best Meme Stocks To Buy Now

This Canadian company is known for pioneering the smartphone, but it quickly went by the wayside when Apple revolutionized the space. These days, Blackberry is a software firm providing endpoint security software and other Internet of Things management products for customers such as the auto industry. When you open and fund an eligible Charles Schwab account with a qualifying net deposit of cash or securities. We believe everyone should be able to make financial decisions with confidence. Roaring Kitty’s real name is Keith Gill who was also on Reddit as u/deepF…Value and active on the subreddit r/wallstreetbets. Investing can be the most surefire path to becoming and remaining financially free.

  1. Meme stocks became all the rage among retail investors during the COVID-19 pandemic.
  2. Meme stock communities pumped the brick-and-mortar retailer Bed Bath & Beyond (BBBY) to extreme levels in the summer of 2022 when it was up 314% for a short period before crashing back down.
  3. But, as many traditional investors and analysts point out, these viral stocks can be very risky since they rely on high interest from small investors to sustain the stock prices’ liftoff “to the moon.”
  4. 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.
  5. More traditional investors decry the lack of business fundamentals and strong performance to justify sharp surges in stock price.
  6. Meme stocks often happened to be hard to borrow, with a high short-interest ratio.

Meme stocks are so-named because ideas about them spread rapidly on social media and web forums. Meme stocks also see communities built around them that promote the hype and elaborate on the original meme, inventing specific terms and symbols to accompany the stock. GameStop, among the first meme stocks, is a prime example of how the retail investor community identified a highly shorted stock and used a short squeeze to work in their favor. The main victims of the squeeze ended up being a handful of hedge funds, some of which were forced to shut down due to heavy losses. As a result, the meme stock concept adopted a David vs. Goliath or Robin Hood connotation of taking from the rich Wall Street elite and rewarding the small retail investor.

How to identify a good long-term meme stock

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. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.

Without their cult followings, meme stocks are not necessarily valuable assets. These online communities, such as the popular Reddit forum WallStreetBets, coordinate buying and selling efforts to influence stock prices. With enough online support, meme stocks can maintain elevated stock prices regardless of the underlying company’s worth.

How meme stocks work

As a result of sky-high prices and persistent demand for shares among individual investors, AMC Theaters CEO Adam Aron took advantage of the elevated valuation and engaged in a series of secondary (follow-on) offerings in 2021. This raised more than $1.5 billion in the first quarter (Q1) from voracious meme stock buyers. That said, it’s https://www.forex-world.net/ clear that certain stocks have gained a cult-like following on social media channels. The trading volume of these stocks has been huge, largely due to retail investors who are looking for quick wins. Whether as a result of stock purchases or options bets, meme stocks have rallied impressively  on heavy volumes over the past year.

Retail investors have started moving back into equities, buying a net $5.6 billion worth of stocks in January as major U.S. indices reached fresh record highs. While institutional investors are taking profits, retail traders are returning to the market, and reports indicate they remain optimistic overall. This happened due to the sudden widespread online discussion, notably on social media platforms and forums such as Reddit.

Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses.

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Roundhill Investments came out with a meme stock-focused ETF in December of 2021 under the ticker symbol ‘MEME’. MEME features an equal-weighted portfolio of 25 stocks based on social media popularity and market sentiment. The top 25 such firms are included in the portfolio, which is re-examined and rebalanced twice a month. While the company remains with no profits, resulting in a negative price-to-earnings (P/E) ratio, growing online discussion around its growth potential could further bolster its meme status in the short term. However, increasing losses over the past four years could be a cause for concern in the long term, as the company does not even offer a dividend. So, although an overlooked meme stock name, its status may be shortlived – as it should, being a meme stock.

He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. In any case, I’d certainly recommend considering buying MSFT stock now . I’ve been interested in the shares for some time, and I may pull the trigger on it soon. This company’s status as a 5G provider does give investors reason to be upbeat about its growth outlook. However, it was Nokia’s following on forums such as Reddit’s WallStreetBets which really galvanized many investors to pile into this name.

In 2022, Bed Bath & Beyond announced intentions to sell 12 million shares in a secondary offering as meme stock promoters pumped the value of its stock. However, the stock fell steeply following the company’s announcement of the plan. A meme is an idea or some element of popular culture that spreads and multiplies across https://www.investorynews.com/ people’s minds. Memes gained increasing prevalence and relevance as the internet and social media grew. They allow people to rapidly spread humorous, interesting, or sarcastic videos, images, or posts to others around the world. The rapid and multiplicative effect of sharing such posts could make them go viral.

That said, the number of retail investors who are interested in Microsoft and other mega-cap stocks is likely to increase meaningfully. That’s because, as stocks’ valuations come down, the share prices of many companies,  including Microsoft, have fallen meaningfully, making these names more attractive to many retail investors. Meme stocks lure investors with the promise of potentially big returns in little time. Bear in mind that meme stocks can be especially volatile, so plan accordingly and be prepared to continue investing more over time. If you’re not interested in building and managing your own portfolio of meme stocks but still want some exposure to the movement, there are some ETF solutions to help.