What are meme stocks?

So-called meme stocks first entered the investing landscape in early 2021, when individual investors targeted heavily shorted stocks with the hope of initiating a short squeeze, which can drive the stock price higher and higher as those who were short rush to buy and cover their positions.

How do meme stocks get popular?

Meme stocks usually gain popularity through discussion threads on community forum sites such as Reddit and social media platforms. The first successful meme stock was GameStop Corp (GME) GameStop may have started the meme stock mania, but others have followed in its footsteps. Today there are entire indexes of meme stocks.

Are meme stocks a good investment?

Without their cult followings, meme stocks are not necessarily valuable assets. These online communities, such as the popular Reddit forum WallStreetBets, coordinate buying and selling efforts to influence stock prices. With enough online support, meme stocks can maintain elevated stock prices regardless of the underlying company's worth.