These stocks tend to experience huge prices swings, often driven by social-media chatter. The concept of a meme stock is a new one, and there’s no single definition or official designation. Instead, a meme stock label is a part of the language of the Internet. A meme is a way for social-media users to quickly communicate an idea, style, trend, or behavior, usually through a combination of an image and a catchphrase. Meme stocks are stocks that see dramatic increases in price, mostly fueled by social-media discussions on Reddit and Twitter. Trading in these stocks is usually driven by short-term buyers and sellers. And because these stocks rarely have business fundamentals to support huge jumps in price, they tend to experience huge price swings.
The first prominent example of a meme stock in 2021 was struggling video game retailer GameStop (GME). The stock traded $19 per share at the start of the year, but by Jan. 28, it hit an all-time high of $483 per share. Continue reading from Morningstar