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What are meme-stock frenzies and why do they fizzle?
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Most meme stocks are brand-name companies that consumers are familiar with, such as GameStop and AMC Entertainment.
PHOTO: REUTERS
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NEW YORK – Some stocks are prone to sudden rallies and swift declines, not because their underlying businesses have changed but because of the influence of social media personalities. GameStop has reawakened the “meme stock” animal spirits twice since May, spurred by a well-known Reddit user who set off the first frenzy in 2021. A smattering of meme moments in 2024 have caused multi-billion-dollar stock moves – and big losses for investors who were late to the trade.
Meme stocks tend to share several characteristics – including the ability to catch the internet’s imagination and get promoted on social media by influential retail investors. The posts are often accompanied by images or videos – memes – that incorporate pop culture references.
