What Are Meme Stocks?

What are they, and which companies are the ‘Class of 2021’ meme stocks?

During the COVID-19 pandemic, meme stocks have been all the rage among retail investors. When a firm’s shares catches fire on social media platforms like Reddit and rapidly rises in price, it is known as a meme stock.

However, as many conventional investors and analysts have noted, viral stocks are extremely hazardous since they rely on the interest of small traders to maintain their prices.

However, simply declaring all meme stocks to be too dangerous might be a mistake. Investing in the right meme stock for the correct reasons can make a lot of sense for the appropriate individual.

What are meme stocks, and are they a worthwhile investment?

Meme stocks grow quickly in value owing to a sudden increase in interest on the internet or social media, as well as buying by small investors. Short-term price rises can frequently reverse course. This makes meme stocks far more volatile than regular stock market fluctuations.

The word “meme” originates from the Greek term mimema, which means imitation, and is used to describe cultural information that is copied and frequently passed around on social media. A meme stock, therefore, is an investing idea that has been imitated by other investors.

Top meme stocks, for now

Now in its second year, the movement has given rise to new meme stocks on a regular basis as individual investors search for new strategies to outpace the stock market.

The two most well-known meme stocks are video game retailer GameStop (GME) and the world’s largest movie theater chain AMC (AMC).

Here are five more stocks to research:

1. Bed Bath & Beyond (BBBY)

Bed Bath & Beyond is no longer the same as it once was. The company, which has been struggling in recent decades as e-commerce growth gradually slowed, was badly hit by the epidemic and subsequent lockdowns. However, Bed Bath & Beyond is rebounding as the economy improves and establishing a new omnichannel business both in stores and on the net.

2. Blackberry (BB)

BlackBerry was once a household name for pioneering the smartphone, but it quickly faded away when Apple changed the game. These days, Blackberry is a software firm that develops endpoint security and other Internet of Things management solutions for clients such as the automobile industry.

3. Nokia (NOK)

Another icon from the 1990s and 2000s was Nokia, which helped to popularize cellphones. However, Nokia has shifted focus away from consumer goods such as phones and has redirected its attention toward infrastructure equipment for telecom and mobile network operators. With 5G mobile network construction now in full swing, Nokia has a good chance of regaining some long-term strength.

4. Palantir (PLTR)

Palantir, a member of the hot 2020 IPO stock class, has attracted a large following after going public. The firm creates enterprise big data and AI software that aids organizations in modernizing their operations for the digital age. Palantir has been working with government agencies, but it is working quickly to increase its presence in the private sector.

5. Virgin Galactic (SPCE)

Virgin Galactic was one of the first SPAC transactions struck by former Facebook executive Chamath Palihapitiya. Richard Branson’s Virgin Group is part of a new billionaire-backed space race with Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX. In the near future, Virgin Galactic will conduct science research flights.

Meme stock advantages

There are some advantages to investing in meme stocks (and potential meme stocks before they rocket higher) because a boost in buying activity may cause a stock’s price to rise.

  • Possibility for high returns in a short period.
  • Buying a stock before the rest of the market gets wind of it.
  • A younger generation familiar with social media still has lots of investing to do, so the meme stock movement could be here to stay.

Meme stock Disadvantages

Meme stocks, like other highly volatile investments (such as the meme stock movement), have disadvantages.

  • The meme stock trend might not last forever — especially as traders return to work and less time in front of their trading accounts.
  • Price moves are unpredictable and could lead to quick losses.
  • Some meme stocks aren’t trading on fundamentals, so returns can suddenly reverse course, making the companies lose favour

What do you think?

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