What Are Meme Stocks?

Meme stocks may have gone mainstream, but they are no sure thing for everyday investors
The COVID-19 lockdowns were a game changer for society in critical lifestyle areas like the workplace, the economy, technology and travel.

Make no mistake, Wall Street trading wasn't immune to the ravages of the pandemic.

With more people at home starting in 2020, social media became a major hangout for marginalized stock market investors. Out of widely bookmarked platforms like Reddit, YouTube, TikTok and Twitter (among others), a new trading strategy emerged from lockdown-market luminaires: the "meme stock."

A meme stock is a company that generates a buzz on social media that shines a Hollywood-sized Klieg light on an investment that's otherwise widely ignored.

"A meme stock is a stock that has become popular and traded heavily (because of) social media, often due to a viral meme or online community," says Seth Diener, private wealth manager at the financial advisory firm Diener Money Management. "These stocks are often volatile and can experience sharp price swings, making them a risky investment for novice investors."