Others, notably GameStop, remain elevated, although still far lower than the all-time highs. GameStop (GME) became a heavily shorted stock due to a decline in foot traffic at malls and dwindling revenues. The short interest, therefore, had grown to over 100% of the shares outstanding. The case that a short squeeze could be precipitated was then developed and touted on Reddit and other investment forums. In addition, big investors, such as Scion Asset Management’s Michael Burry and Chewy co-founder Ryan Cohen, also took long positions.
If you’re thinking about buying and selling meme stocks, keep in mind that you will probably have to pay taxes on your profits. Capital gains tax rates are especially high on stocks you held for less than a year. 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.
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. In 2021, retail investors bet big on so-called “meme stocks,” with the goal of making money and upending power dynamics on Wall Street.
A member of the hot 2020 IPO stock class, Palantir quickly gained a large investor following after making its public debut. The company builds enterprise big data and AI software that helps organizations update their operations for a digital era. Palantir has concentrated exposure working for government entities, but it’s quickly working to expand further into the private sector. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances.
Retail investors are also likely to remain keen to pick up on the latest meme stock. Dominated by younger investors, meme stocks are still seen as a way to generate outsized returns in a short period, especially in the coinmama review face of rising housing costs and inflation in general. But meme stocks also remain very volatile and risky, and retail investors are likely to be the ones to experience the most losses if it all comes crashing down.
AMC’s Meme-Stock Era Is Long Gone as Box Office Sags, Debt Looms
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. Carvana shares have already been in a short squeeze as shares alvexo review rose as high as $57.19 and have rallied over 1,000% in 2023. The short squeeze caused short interest to fall back to 21%, but anything above 20% is still considered a high short interest. Redditors are famously committed, but the company’s relationship with its most devoted users has been strained in the last year.
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. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
It would take almost six full days for short-sellers to cover their positions, based on this three-month volume data. Similar to Blink, there are two reasons it’d make a perfect meme stock. First of all, retail traders are big fans of left-for-dead turnaround stocks in the wake of the pandemic. There were serious concerns last year that Dave & Buster’s might not survive. But more than a year after the coronavirus pandemic was declared, things look to be perking up.
Intercept Pharmaceuticals
Reddit alienated many of its communities, known as subreddits, with sweeping API changes, making access to API so expensive that some beloved third-party apps had to shut down. In protest of the changes, more than 8,000 subreddits went dark, making parts of the site virtually unusable. The analyst thinks that in 2024, AMC will continue to issue pre-authorized shares to pay down its high-debt balance, as evidenced by the $350 million equity offering completed this week. “The company is focused on right-sizing the balance sheet, while attempting to maintain strong relations with the AMC lifers still propping up the stock,” said Reese. AMC’s shares ended Friday’s session at $6.65, a far cry from their high of $393.63 on June 2, 2021, during the meme-stock frenzy.
This move went directly against traditional investors who were short-selling the stock in hopes of buying back their shares at a cheaper price. To thwart those ambitions, Redditors gleefully managed to raise the price of GameStop shares to an all time high of $483. The GameStop saga was a combination of bored and nostalgic retail investors, massive short interest, pandemic-related stimulus money and a social media community going viral. The conditions required to create another substantial short squeeze like that may never materialize again, but it certainly isn’t the end of short squeezes (or anger at hedge funds).
- And, as hard as it is, if you’re going to invest in meme stocks you’re going to need to be able to stomach volatility and be fine with losing out.
- Seeing some of these rallies play out, by the shares of companies with dubious fundamentals, has been remarkable.
- GME eventually fell to a low of $61.54 (pre-split) on Jan. 6, 2023.
- The surge of its stock wasn’t caused by any real changes in its underlying business.
With expertise in FX, macros, equity analysis, and investment advisory, Stavros delivers investors strategic guidance and valuable insights. The Canada-based company, which has now pivoted to cybersecurity, saw its stock rise 115% early that year. By contrast, a legitimate meme stock movement is typically accompanied by a slow rise in posts and interest that catches fire and takes off, like with GameStop in late January. 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. Spammers come out of the woodwork, often after previously getting banned, and copy-paste conversations to generate awareness about a stock they want to push, which is atypical for most conversations on Reddit. If you still want to try to take advantage of the meme stock frenzy, you can do it responsibly.
Stocks have gone parabolic since the beginning of public markets, but meme stocks existed during a very unique time. GameStop Corp going parabolic required a confluence of events that will be hard to replicate. Pachter pointed to Cohen’s decision in 2022 to unload his huge stake in beleaguered home goods retailer and sometime meme stock Bed Bath & Beyond Inc. just months after buying it. In August of that year Cohen sold his entire stake in Bed Bath & Beyond five months after accruing the stake in an activist campaign, amassing a profit of more than $58 million.
Reddit meme stock crazes before the company IPOs
The company claims that deriving a credit score is more accurate, reduces lenders’ default risk, and provides borrowers with faster and more personalized loans. UPST reached a high of $401.49 in October 2021 and fell to a low of $11.93 in May 2023. UPST shares are up over 430% in 2023, propelled by its 37.44% short interest. Tupperware has virtually no competitive advantage, and its sales model is a hindrance rather than helpful. The company also sells kitchen utensils and products from cutting boards to measuring cups.
Should you invest $1,000 in Tupperware Brands right now?
Like GameStop, NOK stock jumped by an incredible amount in early 2021. Many retailer investors became interested in Nokia because of the high number of its shares that were being sold short by institutional investors and hedge funds. 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.
Meme stocks have been a boon to investors, day traders, and brokerage platforms but companies have also capitalized on the meme stock phenomenon. This raised more than $1.5 billion in the first quarter (Q1) from voracious meme shakepay review stock buyers. The YouTube persona Roaring Kitty posted a future viral video laying out the case for why shares of brick-and-mortar video game retailer GameStop Corp. (GME) could soar from $5 to $50 per share in August 2020.