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What Is Meme Stock?

Written by Jasir Jawaid

In mid-2020, Keith Gill, who goes by RoaringKitty on YouTube, started sharing his thoughts on video game retailer GameStop on social media platforms, including the r/wallstreetbets subreddit. He posited that because the company was a target of short-sellers like hedge funds, they would have to cut their losses amid a short squeeze, which would drive the stock price higher. Stuck indoors due to the pandemic and thanks to apps like Robinhood that have made trading easy, an army of retail investors soon started to buy GameStop's shares. This resulted in Gamestop's stock price reaching dizzying highs in early 2021 and professional investors scrambling to limit their losses.

And just like that, the first meme stock was born. Many who participated in the short squeeze saw this as a Robin Hood moment where Wall Street veterans were robbed and their riches were shared with individual investors. From there, the meme stock movement gained steam and enveloped other companies such as electric car maker Tesla, technology company Nvidia, data analytics company Palantir, cannabis products company Tilray, and Bed Bath & Beyond.

Meme stocks had a banner year in 2021. GameStop, for example, saw its stock price rise more than 1,000% in January 2021. The meme stock mania wasn't just limited to GameStop. Movie theatre chain AMC Entertainment's stock price hit an all-time high in June 2021, and BlackBerry's share price more than doubled that year. But even as these mom and pop investors kept identifying other companies are meme stocks, none reached the success enjoyed by GameStop and AMC's stock price.

This article was published on JoyWallet and can be read here in full.


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