What it is
A meme stock refers to the shares of a company whose price movements are primarily influenced by online chatter, social media trends, and coordinated buying by retail investors, rather than traditional financial fundamentals like earnings or revenue. These stocks often experience extreme volatility and rapid price swings as large groups of individual investors rally behind them, fueled by discussions on platforms like Reddit or Twitter.
Meme stock phenomena frequently lead to significant market dislocations, as seen with GameStop and AMC in 2021. Their price action is often characterized by short squeezes, where heavy short interest combined with coordinated buying forces short sellers to cover positions, pushing prices even higher. Retail investors closely follow meme stock narratives, but the extreme volatility and detachment from fundamentals make them high-risk, speculative plays.
Why it matters
Meme stocks offer potential for rapid gains but carry extreme risk due to their volatility and speculative nature. Understanding them helps you navigate market frenzies.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice