Why meme stocks are outperforming the market
In late January and early February when GameStop started appearing in news, my mind was blown away. I could not believe that an dying brick-and-mortar shop was rising and rising. First I was thought this was just “ordinary” pump-and-dump scheme, but after reading what people were writing, I could say that it was wrong to assume so.
What surprised me the most was that people were really believing in this stock, but it was actually for a good reason. Big companies were short-selling the stock, and when the small ones grouped together price just kept growing. Eventually the billionaire had to close their margin positions and the community profited heavily.
One of the WallStreetBets user, made allegedly made over $40,000,000 dollars with just $40,000 investment. There are many people thought who lost money with the hype. The ones who bought at the “top” lost significant sums of money.
Meme stocks are still performing well
As of 9th of June many of so called meme stocks are still performing pretty good. When many small fishes group together they can win the bigger fish. Same thing goes with stock market. When multiple smaller investors group together the price goes up. But you may ask why people buy stocks even their numbers look bad, and the future doesn’t seem bright for the stock. People buy what they think will rise, not necessarily look the numbers behind the company. Also one of the things that makes people buy stocks is the “Tesla” effect. People believe in the future of the company, even if numbers currently aren’t looking that good.
More than just a stock
The reason for buying meme stocks like GME or AMC varies from person to person, but for those who came from WallStreetBets, it was more like a challenge. It was a challenge to destroy something that have had too much power in the stock market for way too long. Big companies that control the market, and have been doing so for decades.
New meme stocks
The amount of “meme stocks” have been constantly rising. Here are the 3 most popular ones.
- AMC Entertainment Holdings
- American cinema chain with 620 locations across United States. AMC short-squeeze started in late January.
- GameStop
- Brick-and-mortar video game store with more than 4800 locations worldwide. Over 3000 of them are in the United States. GameStop is the most-known meme stock at the moment.
- Clover Health Investments Corp
- One of the latest meme stocks is medical investment company CLOV. Main target market for this company is medical specialities.
Final
I think meme stocks are here to stay. Let me know in the comments below, what do you think will happen in the future.
Thanks for reading my article! If you have any questions, be sure to leave the below. Also be careful where you invest your money. It is never fun to lose any of it.
Note
This is not a financial advice of any form. You may lose everything in stock market. At the time of writing this article, I don’t own any of stocks mentioned in the article.
