stocks and bonds meme and the Future of Trading

The stock market has come a long way, and the rise of online trading has made it more accessible than ever.

As we discussed earlier, the concept of stocks and bonds has been around for centuries, with the first recorded stock trade dating back to 1602 in the Dutch East India Company.

The internet has revolutionized the way we trade, with online platforms allowing individuals to buy and sell stocks and bonds with ease.

With the rise of mobile trading apps, it's now possible to trade on the go, making it easier than ever to get in on the action.

A meme is essentially a piece of information, idea, or content that spreads rapidly online, often through social media platforms like X (formerly Twitter) and Facebook. This can include anything from a funny image or video to a clever phrase or joke.

These online communities can dedicate heavy research and resources toward a particular stock, which can lead to a meme stock. Meme stocks often have heavier discourse and analysis in discussion threads on websites like Reddit.

Independent individuals, each with their own investment views and preferences, can collectively initiate short squeezes in heavily shorted names.

Meme stocks are shares of companies that have formed online communities to promote and build narratives around them. These stocks have generated their own slang and language used in online forums and social media.

Meme stocks carry an added risk of higher-than-normal volatility, which can be driven by viral posts on social media platforms. This means that their prices can fluctuate rapidly, making them a high-risk investment.

Here are some key characteristics of meme stocks:

Meme stocks are actual stocks listed on exchanges and available for trade, but critics argue that their price performance has little to do with their fundamentals.

Investing in meme stocks can be a thrilling experience, but it's essential to understand the potential rewards. High returns are possible, with rapid and significant financial gains on the table.

Meme stocks have a strong backing from online communities, which can be a major advantage. This collective support can lead to dramatic upswings in stock prices.

The potential for short squeeze opportunities is another attractive aspect of meme stocks. This can be a lucrative way to profit from the market.

Investing in meme stocks can also be a learning experience, allowing you to gain insight into market dynamics and trading.

Here are some key benefits of investing in meme stocks:

Meme stocks can be a wild ride, but it's essential to keep a balanced portfolio to avoid getting caught up in sentiment-based trades.

You can still learn more about a company through earnings reports, press releases, historical analyses, and more, even if you're investing in meme stocks.

It's crucial to consider the risks and rewards of investing in meme stocks, especially if you're a retail investor.

Meme stocks hold the potential for big gains, but they also come with high risks, and it's essential to explore these risks and rewards before investing.

Here are some potential risks and rewards to consider:

GameStop was founded in 1984 and has over 4,500 physical stores, in addition to an online store. The company's stock was originally traded on the New York Stock Exchange in 2002.

The GameStop stock price was $17 at the start of 2021, but after a meme effect, it jumped to $325, marking an 1800% gain. This gain was short-lived, as the price fell to $50 per share just a few days later.

Roaring Kitty, a YouTube persona, posted a video in August 2020 that predicted GameStop's stock could soar from $5 to $50 per share. This prediction sparked a massive short squeeze, with the stock price exploding to nearly $500 in January 2021.

The initial meme stock craze ended with GameStop shares drifting lower, but they experienced a sudden resurgence in mid-May 2024, fueled by Keith Gill's return to social media.

See what others are reading: 2021 Meme Stocks

Meme stocks get their name from the rapid spread of ideas about them on social media and web forums. Memes, in general, are ideas that spread quickly among people.

These internet-fueled ideas often take the form of humorous social media posts and viral videos. Memes have become a significant part of online culture.

The communities that form around meme stocks are just as important as the stocks themselves, as they promote the hype and elaborate on the original idea.

GameStop (NYSE: GME) is a brick-and-mortar video game retailer that was founded in 1984. It has over 4,500 physical stores and an online store.

The company's stock was originally traded on the New York Stock Exchange in 2002, but it didn't gain significant attention until 2021. At the start of 2021, GameStop's share price was $17, but after the buzz created by social media, it jumped to $325, marking an 1800% gain.

The stock price fell to $50 per share during the first several days of February, but another meme run began in mid-March, resulting in the share's price reaching an all-time high of $265 at one point. This frenzy was triggered by the community's excitement and the use of social media signals for trading.

Discover more: Gamestop Meme Stocks

GameStop shares moved from around $4 in the middle of 2020 to more than $480 per share in January 2021, making it one of the most extraordinary short squeezes ever witnessed. The company also experienced a 4-1 stock split in July 2022, which reduced the price of a share of the stock.

Roaring Kitty, a YouTube persona, posted a video in August 2020 laying out the case for why shares of GameStop could soar from $5 to $50 per share. The video helped create a buzz around the stock, which was further fueled by the involvement of investor Ryan Cohen, who purchased a 10% share in the company.

By January 2021, the short squeeze that Roaring Kitty had suggested earlier took place in earnest, with the price of GME shares exploding to nearly $500 amid a frenzy of short-covering and panic buying. The main victims of the squeeze were a handful of hedge funds, some of which were forced to shut down due to heavy losses.

In May 2024, GameStop shares experienced another sudden resurgence, fueled by the return of Keith Gill, aka "Roaring Kitty", to social media. Gill's posts, which included a cryptic image and a series of movie-inspired video memes, reignited frenzied interest in meme stocks, causing a massive surge in trading volume and price.

On a similar theme: What Are Stocks and Shares

GameStop shares skyrocketed nearly 100% on Tuesday, May 14, 2024, following a 74% increase the previous day, resulting in significant losses estimated at over $1.3 billion in just the two days following Gill's tweets alone. The renewed meme stock rally also extended to other companies, such as AMC Entertainment, which saw its stock price jump 120% in early trading on Tuesday.

Meme stocks are actual stocks listed on exchanges and available for trade, but their price performance and appeal have little to do with their fundamentals and much to do with their entertainment value as speculative playthings.

Meme stocks are often hard to borrow, with a high short-interest ratio, which means that a large proportion of the company's outstanding shares have been sold short. This can make it difficult for short sellers to do their job, even for the most motivated ones.

Meme stocks hold the potential for big gains, with high returns and rapid financial gains possible when large amounts of retail investors band together. They also offer community support, market influence, and entertainment value, making them an engaging and exciting investment experience.

Related reading: Value Stocks Definition

Here are some potential rewards of investing in meme stocks:

However, it's essential to consider the risks and rewards of meme stocks, which can be significant and may impact retail investors differently than institutional investors.

Investing in meme stocks can be a wild ride, but it's essential to understand the basics before diving in. Meme stocks are actual stocks listed on exchanges and available for trade, but their price performance and appeal often have little to do with their fundamentals.

Short selling is a common feature of meme stocks, with a high short-interest ratio making it hard to borrow shares. This can lead to a short squeeze, where the price of the stock surges as short sellers scramble to cover their positions.

Meme stocks are often compared to casino games, with some investors focusing on entertainment trading. But, as with any investment, there are potential rewards to consider.

Here are some potential benefits of investing in meme stocks:

However, it's crucial to remember that meme stocks are not immune to risks, and their performance can be unpredictable. It's essential to explore the potential risks and rewards before investing.

With Saxo, you can buy meme stocks at competitive prices, making it easier to get started with your investment journey.

Saxo offers a commission per share of 0.01 USD, which is a relatively low fee compared to other trading platforms.

This low commission per share makes Saxo a great option for traders who want to buy and sell meme stocks frequently.

You can choose the pricing plan that fits your needs and trading volume, giving you more control over your investments.

Meme stocks have become a thing, and they're not just about making money. They're often driven by online buzz and social media hype.

Tesla is a great example of a meme stock. Its stock price soared in 2021 due to a massive online following and media sensation.

Retail traders try to persuade others to short Tesla's stock, which can cause an artificial price increase followed by a decrease. This is because people buy stocks after hearing about them on social media, creating a false sense of value.

Explore further: Tesla Stock Split

Tesla, a company founded in 2003, has been involved in various initiatives including electric vehicle development, manufacture, leasing, and retail sales. They also produce energy generators and storage devices.

In 2021, Tesla's stock price experienced a historic 12-day rise, making it the highest in stock market history. This was largely driven by investor interest and media sensation.

Nio, a Chinese company, is the industry leader in premium smart electric vehicles. They design, produce, and market electric vehicles, and are also focused on developing technology for driverless vehicles.

Nio's stock price saw a remarkable return on investment of over 1,250% in 2021, with the price of a share climbing from around $4 to $54. This led to a significant increase in the company's market value.

Meme stocks often have a high short interest, with hedge funds betting against the company's financial future. This can make them potential targets for retail investors to push into a short squeeze through buying campaigns.

Intriguing read: Stock Market Crash

Snap (NYSE: SNAP) is a company that owns and operates the popular social media network Snapchat. Most of Snapchat's revenue comes from online advertising, which represents 99% of the company's overall cash flow.

Snap debuted on the public stock market in 2017 with a share price of $27. The price dropped to an all-time low of $5 per share in 2020, but it peaked at $83 per share in 2021, which was its all-time high price.

Apple's new privacy enhancements had a significant impact on Snap's revenue, but it still managed to reach $1.06 billion in revenue for the first quarter of 2022.

Discover more: Stock Price