For longer-term investors, meme stocks may be best left out of core portfolios. Their cultural and financial relevance means they can move broader markets and even influence regulatory frameworks. Understanding their behavior is key to managing risk in a modern, internet-fueled market. At the same time, retail investors are pushing back against what they see as overreach. Many view attempts to regulate meme stock behavior as a threat to their newfound influence and market access. This ideological battle between decentralized traders and centralized oversight could shape the next phase of the meme stock movement.
- Meme stocks are no longer just lottery tickets—they’re becoming speculative vehicles with tactical nuance.
- Consequently any person acting on it does so entirely at their own risk.
- In this environment, attention, not analysis, has become the new currency.
- 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 risks.
- The easy money phase of meme stocks is over, but opportunities remain for smart traders.
This speculative stock movement appeals to risk-tolerant traders who thrive on volatility. While most meme rallies start with a short squeeze, some evolve into a gamma squeeze, where options activity accelerates buying pressure. Learn how a gamma squeeze magnifies macd and stochastic use volatility and fuels extreme price spikes. Meme stocks exist because the market has become as social as it is financial. Platforms like Reddit, TikTok, and X turned investing into a viral investing trend, where community excitement can move prices faster than news or data. In this guide, we’ll break down how meme stocks work, what drives their wild swings, and what every trader should know before joining the next viral investing trend.
The “stonks” meme symbolizes investing as a cultural movement rather than a financial one.It reflects humor, defiance, and a willingness to embrace risk for collective identity. It works as a middleman, allowing you to link your bank details to your PayPal account, which makes spending and receiving money significantly easier than having to type in card details every time. Tesla is the original electric vehicle (EV) trailblazer, and at times has been ‘worth’ more than every other car manufacturer in the world combined. For context, the stock was worth more than $400 three years ago, has fallen to less than $200 today — and is up more than 1,100% over the past five years.
These aren’t lottery tickets—they’re growth stocks with unusually passionate followings. The traders who survive meme stock cycles are the ones who remember they’re trading sentiment, not investing in companies. The movie theater business hasn’t recovered to pre-pandemic levels, and streaming services continue eating into box office revenues. Yet AMC maintains a 15.8% short interest rate, meaning any positive catalyst could trigger another squeeze. The question isn’t whether AMC will rally again—it’s whether the company will survive long enough for retail traders to care. The investment thesis writes itself—if meme trading is here to stay, why not own the casino?
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. Once-beloved names like Bed Bath & Beyond, which previously restructured, lacked the liquidity or retail momentum to stage a real comeback. Some penny stocks saw rapid spikes followed by complete collapses, leaving late entrants holding the bag. A well-timed entry during a viral phase can yield outsized returns within hours.
They may never be safe long-term bets, but they will continue to offer asymmetric payoff opportunities—for better or worse. While GameStop and AMC once again grabbed headlines, the 2025 meme surge included a more diversified list of names. Tupperware, BlackBerry, Nikola, and Faraday Future saw dramatic gains, but with varied levels of staying power. New entrants like TruthSocial (following its volatile public debut) and struggling AI startups also joined the meme mania club. What begins as a joke or protest can evolve into a full-scale social media stock surge, turning obscure tickers into trending topics.
GameStop
Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. 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.
Pre-Market 60 Minutes: Which Three Breaking News Stories Will Set Today’s Trading Window?
Kaitlyn Wolf is a personal finance, investing, and lifestyle writer with over 8 years of experience. She specializes in breaking down complex investment strategies into clear, actionable insights for investors at all levels. Driven by a passion for financial empowerment, Kaitlyn helps readers take control of their finances with straightforward, easy-to-understand guidance. Her work has been featured on leading platforms such as MoneyLion, Yahoo Finance and Benzinga. Both companies generate genuine excitement on social media while delivering measurable business results. The retail enthusiasm becomes self-reinforcing when backed by growing revenues and improving margins.
Can Meme Stocks Lead to Big Losses?
Look for sudden spikes in social media mentions and online discussions; key signs of crowd-driven trading. Retail investors share memes, screenshots, and strategies, creating waves of stock market buzz trends that amplify buying pressure and visibility. 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.
The stock market has traditionally been a serious and complex arena, with investors analyzing financial statements and market trends to make informed decisions. But the rise of social media and online communities has brought about a new phenomenon known as meme stocks. These stocks are often driven by online communities and viral trends rather than traditional fundamentals. While they may seem like risky and speculative investments, meme stocks have gained a cultlike following and caused major disruptions in the market. In 2025, retail traders are using zero-day options (0DTEs) at unprecedented rates.
How to trade
We’re going to cut through the Reddit echo chamber and show you which meme stocks still deserve your attention—and your capital. 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. After its meme-driven 12,000% rally that took GameStop (GME 2.95%) from $0.64 to a record high of $120 in January 2021, things have never really been the same — for the company and for investors.
Risk Assessment
GameStop and AMC were perennial members of this club, supplemented by newcomers. The shares climbed relentlessly through January 2021, soaring from a low of $12.16 in mid-December to an intraday high of about $483 on Jan. 28. It closed that day at $193.60, delivering a prompt lesson that investing in stocks based on claims touted online is a mug’s game. As long as online communities exist, there will be room for social media stock surges tied to collective excitement. Allocate no more than a small percentage of total capital to speculative stock movements that rely on online sentiment.
Super Micro Computer is one of the most important companies in the world of high-performance computing. Of course, much of the information shared on social media is of fairly poor quality. But for balance, investors can now receive live information from famous accounts or bounce ideas off each other in a way that had not really existed before 2021. Our lessons, designed to help you learn to trade, cover everything from smart buying and selling decisions to the nuances of trends and candlestick patterns. GameStop has the financial stability to attempt a genuine transformation, though the clock is ticking on proving it works. Robinhood represents a pure play on the meme trading phenomenon itself, which could be brilliant or circular depending on how the market evolves.
- Some investors made the theater operator AMC Entertainment a meme stock.
- Of course, much of the information shared on social media is of fairly poor quality.
- Allocate no more than a small percentage of total capital to speculative stock movements that rely on online sentiment.
- IoT revenue rose by 25% year-over-year to $66 million on a gross margin of 85%.
- Professional traders learned the hard way that ignoring retail coordination was expensive.
In Q4 results, the company delivered record year-over-year revenue growth for both IoT and Cybersecurity divisions, with a QNX royalty backlog of $815 million. IoT revenue rose by 25% year-over-year to $66 million on a gross margin of 85%. Smart traders use these tools to get ahead of the crowd, not follow it. If you blinked you may have missed this, but the stock of Beyond Meat, the purveyor of meatless burger patties, had a spectacular run a few days ago.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.
Risk Management in Meme Stock Investing
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. 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.