The "Meme" in Meme Stocks
What is a "Meme Stock"? If you are not familiar with the concept of "Meme Stocks," the events surrounding the Gamestop stock will provide you a very clear understanding! Gamestop is an American-based company whose sales and stock price were stagnating, and as a result, many hedge funds were shorting the stock, hoping to make a profit off of Gamestop's poor performance. At the same time, a subreddit on Reddit known as r/wallstreetbets was gaining massive popularity. The community was well-known for making highly risky investments for fun, and they were able to catch a whiff of hedge funds shorting Gamestop. Hence, the community decided to unite themselves, and invest in the stock heavily to drive the price up at a huge scale to increase their profits, going from a stock price of $16 to $80, a five-time increase in a single day! We can see that the stock price of Gamestop is now heavily influenced by social media, and that's exactly what we define a meme st...