What is a meme stock?
A meme stock is a company share that quickly jumps in price due to attention from a dedicated online following. Meme stocks usually gain popularity through discussion threads on community forums such as Reddit and on social media platforms. The first successful meme stock was GameStop Corp (GME).
If you want to invest in meme stocks, or any stocks for that matter, you'll need to open a brokerage account first.
5 best-performing meme stocks
GameStop may have started the meme stock mania, but others have followed in its footsteps. Today, there are entire indexes of meme stocks, but even these struggle to paint an accurate picture of the constantly changing meme stock landscape.
Below are the best-performing stocks in the Solactive Roundhill Meme Stock Index, ordered by one-year returns.
The best-performing meme stock by one-year return is Micron Technology Inc (MU), which is up 784.04%. | ||||
|---|---|---|---|---|
Ticker | Company | Performance (Year) | ||
MU | Micron Technology Inc | 784.04% | ||
AMD | Advanced Micro Devices Inc | 306.50% | ||
BB | BlackBerry Ltd | 197.93% | ||
TECK | Teck Resources Ltd | 45.58% | ||
NIO | NIO Inc ADR | 41.32% | ||
Source: Finviz. Data is current as of July 1, 2026, and is intended for informational purposes only. | ||||
How meme stocks work
Without their cult followings, meme stocks are not necessarily valuable assets. These online communities, such as the popular Reddit forum WallStreetBets, coordinate buying and selling efforts to influence stock prices. With sufficient online support, meme stocks can maintain elevated prices regardless of the underlying company's value.
Part of the motivation behind the online support for certain meme stocks comes from hedge funds' short positions in those companies.
Hedge funds are types of investments that pool money together from wealthy investors, and short selling is when you borrow shares from a broker and immediately sell them with the hope that the stock price will fall. If it does, you can repurchase the shares at the lower price, return them to the brokerage and keep the difference as profit.
But the stock price may rise instead of fall. So if you sell the stock you borrowed for $10, and then its price rises to $50, you're responsible for those shares, meaning you're on the hook for that $40 you owe the broker. And if the stock price rises to $500, you'll owe that difference.
» Dive deeper: What investors need to know about short selling
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Meme stock history
When GameStop exploded in value in January 2021, hedge funds — betting on its failure — found themselves in that position. In August 2020, Reddit user Roaring Kitty posted a video outlining game retailer GameStop's plans to revamp its business model. This video also showed how GameStop had significant short interest (meaning hedge funds were betting that GameStop stock would drop and waiting to sell it at a lower price to reap profits).
When online investors recognized the short positions against GameStop, they took it on as a Robin Hood–like adventure (often using the trading app Robinhood). As a result, hordes of investors started buying GameStop stock, making it very expensive for the hedge funds to buy back from their short positions.
After the GameStop incident, some hedge funds suffered significant financial losses, while some retail investors made millions. Other meme stocks emerged after GameStop, some with varying degrees of success.
People learned major investing lessons during the craze, whether investors made money from meme stocks or not: 35% of Charles Schwab and TD Ameritrade traders were more aware of their risk tolerance and factored it in before making momentum-based trades after the meme stock frenzy. And 22% were more careful about the sources they used for their investment research. A whopping 70% of traders did not plan to participate in meme stocks in the next year.
Terms connected to meme stocks
Meme stock investors have developed a particular vernacular when it comes to investing. Here are some terms you may stumble upon if you spend time on WallStreetBets or other similar forums:
- ATH: An abbreviation for "all-time high."
- BT(F)D: An abbreviation for "buy the (f------) dip." Refers to buying the stock "on sale" when prices are low (buying the dip).
- Diamond hands: This refers to an investor who will hold onto a stock despite significant losses.
- Paper hands: The opposite of "diamond hands," paper hands are more likely to sell their shares — often to the ridicule of diamond hands.
- Tendies: Slang for chicken tenders; this refers to any profits investors make from meme stocks.
- To the moon: If a stock is going "to the moon," users typically mean that it is rising substantially, potentially with no limits.
Can I make money with meme stocks?
While it is possible to make money with meme stocks, it is an extremely risky venture. Meme stock investing relies on trying to time the market, which humans, even those professionally trained, are notoriously bad at. It also depends on knowing which stocks will pop and which won't — which is essentially impossible.
Some of the more popular meme stocks, such as GameStop, continue to trade at higher prices than before the 2021 short squeezes. Others, such as AMC, are now even lower than their pre-pandemic values.
Is there a better way to invest than meme stocks?
Risking money in speculative investments can be exhilarating, but it is rarely the path to long-term wealth. Investing in low-cost index funds and in tax-advantaged retirement accounts, such as IRAs, is more likely to succeed than relying on risky investment strategies.
If you're thinking about buying and selling meme stocks, keep in mind that you will probably have to pay taxes on your profits. Capital gains tax rates are especially high on stocks you held for less than a year.
Article sources
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- 1.U.S. Securities and Exchange Commission. Staff Report on Equity and Options Market Structure Conditions in Early 2021. Accessed May 14, 2024.
- 2.Roaring Kitty on YouTube. The Big Short SQUEEZE from $5 to $50? Could GameStop stock (GME) explode higher?? Value investing. Accessed Apr 6, 2022.
- 3.Charles Schwab. Q1 2022 Trader Client Sentiment Report. Accessed May 14, 2024.
