There were enough examples of big meme stock rallies in early 2021. When done right, they can reward retail traders with handsome returns due to a spike in share prices while supporting businesses that could need a major financial push. Regardless, many meme-stock investors backed AMC stock, as they believed it had potential.
- First, it is one of the pivotal tech players in the video gaming industry, which has the potential to generate a CAGR of nearly 15% by 2026, according to Market Research Future.
- The increased earnings outlook should give investors cause for optimism as this behemoth continues to innovate and expand its reach.
- I believe that the meme stock rallies we’ve seen play out in recent years aren’t likely to become commonplace.
- AI shares peaked at $183.90 in December 2020 before selling off to a low of $10.16 in December 2022.
- Experts generally suggest keeping individual stock picking limited to 5% to 10% of your overall investment portfolio.
Those long-suffering stocks shocked the world by spiking as much as 1,700% and 2,800%, respectively, and ushered in a new era of investing in what are now known as meme stocks. However, it’s worth noting that every meme stock mentioned in this article has sometimes fallen over 90% from its highs. For this reason, they can be dangerous and reflexivity theory are only worth holding if you get in at a good price and things are fundamentally improving. Despite its partnerships with well-known fast and casual restaurants, sentiment turned sour as the competition crawled out of the woodwork, diluting its market share. The supply chain disruption during the pandemic also impacted operations.
That said, the number of retail investors who are interested in Microsoft and other mega-cap stocks is likely to increase meaningfully. That’s because, as stocks’ valuations come down, the share prices of many companies, including Microsoft, have fallen meaningfully, making these names more attractive to many retail investors. While financial advisors also tend to suggest buying and holding stocks, instead of trying to time the market, meme stocks are probably not buy-and-hold stocks, Tuttle says. You’ll want to put in place some kind of exit strategy, like selling some of your investment if the stock becomes too big a percentage of your portfolio. Meme stocks lure investors with the promise of potentially big returns in little time. Bear in mind that meme stocks can be especially volatile, so plan accordingly and be prepared to continue investing more over time.
What are meme stocks?
Equally worrisome, the company’s current liabilities ($279.2 million) are well over double its current assets ($111.4 million). This suggests Dave & Buster’s doesn’t have the capital necessary to meet its expense obligations over the next 12 months. An improving economy could help these figures immensely, but its future remains dicey, at best. But what might scariest of all is that the company’s balance sheet gives no indication that it’s putting its cash to work on research and development.
- While GameStop was the first successful meme stock, it was not the only one.
- Indeed, Carvana’s progress toward that goal is very evident in its recent earnings results.
- I would however prefer to stay on the sidelines and wait for some consistent growth than remain invested.
- Cohen could spearhead GameStop’s e-commerce efforts and help the company get back on track, investors believed.
But with those price swings also parlaying themselves into a year-to-date (YTD) decline of 90%, and bearish short interest of nearly 45%, July could see bulls taking shares for a profitable spin. Yet what really stands out is its muted average daily volume of 1.36 million shares. It would take almost six full days for short-sellers to cover their positions, based on this three-month volume data. The other notable factor is the combination of short interest and short ratio (also known as “days to cover”). As of May 28, Blink had nearly 12.5 million shares held short and a float of 35.9 million shares.
Stocks with high short interest are frequently favoured by the meme stock community in an effort to squeeze anyone who has been shorting the stock into covering their short. Meme stocks refer to a select few stocks that gain sudden popularity on the internet and lead to sky-high prices and unusually high trading volume. While some Reddit traders were able to make a lot of money in a short amount of time by buying and then selling AMC and/or GameStop at the exact right moment, investing in meme stocks is generally very risky. Simply put, meme stocks skyrocket in price in a short period (often hours or days) because of a sudden surge in interest online or on social media and subsequent buying among small individual investors. These short-term surges can often reverse course just as quickly, though, making meme stocks far more volatile than average stock market moves. Nokia supposedly became a targeted meme stock by WallStreetBets due to its involvement in 5G technology.
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. When you’re ready to most valuable companies buy stocks, your first need to open a taxable brokerage account. Robinhood and Webull are two popular trading platforms for active investors, boasting easy-to-use mobile investing apps.
Using ETFs For Meme Stocks
Importantly, though, the company does have a history of being a contentious battleground stock and short interest remains significant with a dollar valuation approaching $21 billion. Overall, if shares are able to confirm the bottoming formation in July, shares may not put together a “to infinity and beyond” style reaction. But a sizzling and profitable rally that could send this best meme stock towards $20 looks worth the price of admission. Additionally, Intercept is the perfect candidate for a short squeeze. Again, doesn’t sound like much — but it’s quite a bit when the total float is only 28.3 million shares.
Reddit’s retail investors may soon be swooning over this under-the-radar trio of heavily short-sold companies.
Now, GameStop shares also happen to be set up for investors to buy in July. Despite posting a much wider-than-expected loss earlier this month and sporting a decent short interest of 23%, bears failed to capitalize on the situation. Interestingly, the defeat also occurred despite June’s broad-based decline to new relative lows. The other catalyst, as you might expect, is the right recipe for a short squeeze. As of May 28, a little over 7.8 million shares of the company were held short.
Many astute retail traders figured if GME shares were to rally, it could cause a crazy short squeeze as the overcrowded short side would be forced to cover to avoid taking large losses. And that’s why analysts seem to think these meme stocks are played out. “Meme stock” ETFs, which own shares of stocks online traders like to trade en masse, are soaring in value.
Our Most Popular Articles
If picking the right Meme stock seems impossible, Meme stock ETFs try to simplify the process. In addition to Roundhill Meme, there’s SoFi Social 50 (SFYF), VanEck Social Sentiment (BUZZ) and AXS FOMO (FOMO). Despite blue wave election results, U.S. pot legalization failed to happen in 2021. The chances of federal pot reforms eur gbp live still appear questionable for 2022 too. With this, plus a recent report from Barclays arguing that there’s not much upside for Canadian cannabis companies from U.S. pot reform, Tilray stock has continued to draft lower. While no longer much of a meme favorite, it doesn’t need association with this fading trend anymore.
These ETFs hold familiar meme stocks such as Gamestop and AMC, and they also hold a few stocks some wouldn’t think to call meme stocks, such as Tesla and Peloton. SoFi’s financial services — all unified together via a singular app — got its start in the student loan niche of the industry. But since becoming a public company, the fintech stock favorite has gotten aggressive, expanding its reach and has added a few million new customers in recent years.
Cons of meme stocks
Fisker just delivered the first of those vehicles to a customer in Denmark. It’s a great example of a business following a reasonable plan while so many other SPAC EV firms have flopped massively. The company attracted more paying customers, while also getting more revenue out of its existing customer base.