What Are Meme Stocks?
Meme stocks are shares that shoot up because of hype on social media, not because of the company's results. Online crowds pile in together, often for fun or to beat short sellers.
How meme stocks work
A stock catches attention on forums like Reddit. Posts and memes spread. Many small investors buy at once, often with call options. If many traders had bet against the stock, a short squeeze can add fuel.
Famous examples
GameStop and AMC in 2021 are the best-known. Both rose many times over in weeks, far beyond what their businesses seemed to justify.
Why they are risky
Prices can fall as fast as they rose. Late buyers often lose the most. When hype fades, the price tends to return toward what the company earns. Know what the business does before you buy.
See it in real companies
Open a company to see what it sells and how it makes money.