While a stock’s performance can alter the value of a massive hedge fund’s short position, think of these risks and rewards in terms of how it would impact you. Meme stocks aren’t immune.īecause meme stocks depend on social popularity rather than company performance, they have their own set of risks and rewards.īear in mind that these risks and rewards generally impact the retail investor segment (aka anyone who trades as an individual investor in the general public). Meme stocks are prone to risk and rewardĪll investments carry a certain level of risk, some more than others. Many meme stock followers are willing to take the bet. There is no guarantee that any of these stocks, or other meme stocks to come, will generate returns. Other companies that have become meme stocks to varying degrees include Plug Power (PLUG), Virgin Galactic (SPCE), Palantir (PLTR), and BlackBerry (BB). AMC shares ballooned 1,496.02 percent in the five months ending June 1. There’s also AMC Entertainment (AMC), an unsuspecting company struggling amid the COVID-19 pandemic. GME shares grew 1,914.55 percent in the first few weeks of the year. Most notably, GameStop (GME) took the world by storm despite obstacles that accompany brick-and-mortar storefronts in the digital age. It’s these individual stocks that investors are doing the work on. BUZZ simply holds the stocks that are buzzing on social media. Related: How to buy stock & ETFs with a debit cardīut it’s not ETFs that have dragged the theme into notoriety. Launched in March 2021, BUZZ holds positions in 75 companies including NovaVax, Amazon, Palantir, and GameStop as of June. Meme stocks became so popular in 2021 that one asset manager created a meme stocks ETF: VanEck Vectors Social Sentiment (BUZZ). Meme stocks are a hard game to play because the peaks and dips can be arbitrary, but they do hold the potential for much larger capital gains. There’s even a fear indicator (CBOE Volatility Index, or VIX) for contrarian investors looking to base their entrances off of others’ exits. Shares are worth what people are willing to pay for them (aka market value). For public companies, much of their value comes from market capitalization. Even stock market social media StockTwits uses their own sentiment measurement to inform users:įor privately held companies, corporate value stems from the bottom line. This is by no means fool-proof, as with any stock market indicator-but it’s common. In theory, the results give insight into how a stock might perform. The indicator requires data from social media and businesses to build the charts. There’s a social sentiment indicator in the stock market that helps investors determine how a particular company is performing in terms of popularity. Social sentiment: How meme stocks popularizeĪ meme stock’s clout grows on social media, which means it stems from social sentiment. One peak does not necessarily mean there will be more, but it’s possible. Many meme stocks are popularized because they’re heavily shorted, which can play into the stock’s performance as well. Just as much as there can be highs during times of high demand, so too can there be lows amid mass exoduses. There are also YouTube content creators, Facebook communities, Twitter hashtags, and even Discord chats propelling these meme stocks into fame.Īs for the popularity that accompanies meme stocks, it fluctuates. This platform fuels the masses to follow trends in rallying behind a stock-sometimes to no apparent end. The WallStreetBets subreddit has 10.2 million readers and counting. One platform in particular is at the center of the meme stock rallies: WallStreetBets on Reddit. When investing in meme stocks, you can still probe the company for more information through earnings reports, press releases, historical analyses, and more.Ī meme stock is any stock that sees increased popularity or awareness based on social media discussions.Meme stocks like GME, AMC, and SPCE (just to name a few) have spawned a meme stock ETF.Examples of meme stocks include GameStop (GME), Bed Bath & Beyond (BBBY), and AMC Entertainment (AMC).Investors often discuss meme stocks on Reddit (like the subreddit WallStreetBets) and often base trades on short interest.Meme stocks are stocks that periodically rally due to internet popularity.Let’s cover how meme stocks work, what to look for in the next meme stock, and how companies like AMC and GameStop got to where they are today. As integral as they are to our everyday lives, maybe it was only a matter of time before they named an investing theme after them. It didn’t take long for memes to become a cultural touchstone.
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