What Are Meme Stocks? Top 5 Meme Stocks Of 2023
by Shahnawaz Alam Finance 30 December 2023
What are meme stocks?
Meme stocks have come to popularity since the COVID-19 pandemic. Individual investors create these stocks. Individual stock investors discuss these stocks on social media platforms such as Reddit. It makes these stocks skyrocket quickly.
However, many traditional investors often warn investors of today’s time about these stocks. According to them, these stocks can be hazardous. The reason lies in their high level of investment from small investors for sustaining the stock prices.
Yes, the traditional investors do have a point. But that is not all. We cannot rule out all meme stocks as risky and call them a mistake for investment. The right investors investing in the right meme stock can make lots of difference for the right reason. Let’s not make it too complex. Read this article if you want to learn about meme stocks and what they are.
What Are Meme Stocks?
The popularity of different popular memes boost meme stocks. These stocks are company shares that can skyrocket in value because of a dedicated following from a community online. These stocks gain popularity and attention due to communication threads on different social media and online platforms like Reddit, Facebook, etc. GameStop Corp is one of the first successful meme stocks.
When people on different online platforms start to converse about these memes online, a meme stock gains a boost in popularity. However, this sudden surge can often turn around their direction, making the meme stocks comparatively more volatile than the stocks.
The word meme comes from the Greek word “mimema.” It means imitation. These memes suggest popular online references most people are talking about on the internet. Some memes are so famous that there are templates on them, and internet users can use them in any context.
How Do Meme Stocks Work?
What are meme stocks? Hopefully, that is clear now once you have read the previous section. Meme stocks are not like regular stocks. Online communities like the Reddit forum WallstreetBets back up these assets. They coordinate buying and selling efforts and influence meme stock prices despite the condition of the underlying company.
A massive motivation behind the online push for different meme stocks comes from the short position of the hedge funds in the companies.
Hedge funds are a type of investment that helps to pool money from wealthy investors. Short selling means buying shares from a broker and selling them immediately, hoping the stock price will fall. If the share falls down, you can repurchase it and return the share to the brokerage. Then you can keep the profit.
But stock prices can rise rather than fall. You may end up selling stocks that you borrowed for $10. Eventually, you can see that the price rose to $50 dollar instead of falling. In such a case, you are responsible for the shares.
It also means that you are responsible for the $40 dollars that you owe to the broker. The same goes for a rise of $500. You will owe the broker the difference.
Common Memestock Terms You Must Know
Forums like WallStreetBets use different vernacular terms for meme stocks. It is all thanks to the meme stock investors who developed these terms to use during their investments.
ATH: Investors abbreviated the term “all-time high” into ATH.
BT(F)D: The abbreviation for the term “buy the (f——) dip” is used as BT(F)D. It suggests buying the stocks on sale when the price gets low.
Diamond Hands: This term suggests investors who keep the stocks despite facing unreasonable losses.
Paper Hands: These are the polar opposites of diamond hands. They sell their stocks and shares too often. The main intention sometimes is to ridicule or make fun of the diamond hands.
Tendies: Tendies stand for chicken tenders. These are profits most investors make by selling meme stocks.
To The Moon: When a meme stock is substantially and continuously rising, the meme stock investors call it “to the moon.” This rise of the stock suggests that the stock potentially has no limits.
Top 5 Meme Stocks Of Today
Let’s make you familiar with some of the top meme stocks of 2023. Here is a list of some of the highest and growing meme stocks in 2023–
Coinbase
Coinbase shows significant meme stock potential in 2023. The price of Coinbase has seen a 140% growth year-to-date. Also, the 2nd quarter results of Coinbase meme stocks show that it has beat expectations. If cryptocurrency makes a comeback, Coinbase will potentially benefit from that comeback.
Rivian
Rivian is currently one of the automotive companies that entered the meme stock market. Most new and famous companies are trying to leverage the social media influences that influence asset prices. No, Rivian has not seen much profit yet. But their vehicles are on the road. However, their stock price is seeing an uptrend before their earning.
Uber Technologies
Here’s one stock with a rarity amongst the meme crowd. Uber Technologies meme stock is one of the rare options among the growing crowd of meme stocks. However, Uber Technologies, INC has suffered and could not boost much profit despite changing its CEO and pushing the service prices up.
But Dara Khosrowshahi, the current Uber CEO, has announced the first-ever operating profit in 2023 Q2. This pleased lots of investors who wanted the company to pay attention to their earnings instead of growth.
SoFi
SoFi, a San Francisco-based Fintech company. They are usually known for providing personal and student loans. According to 2022 data, SoFi has provided more than $73 billion dollar worth of personal loans across different platforms. In addition, they have a substantial base of online followers. Chamath Palihapitiya, the CEO of SoFi, also never shies away from shooting up something provocative online. SoFi also entered the stock market rallies.
Blackberry
Blackberry, a Canadian company, was famous for creating top-notch smartphones. But, their space was overtaken by Apple. Currently, they have switched to being a software firm that provides endpoint security software. They have also provided Internet of Things management products.
Bottom Line
What are meme stocks? Surely, you have the answer to that after reading this article. But, in terms of investment, meme stocks are not really a great long-term approach. You can take an opportunity to experience how such a speculating investment can feel. However, they are not the right option for the long-term process of generating wealth. Hopefully, your answer was present in this article. Do you have any queries related to this topic? If yes, share them with us. Thank you for reading.
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