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The recently released movie “Dumb Money,” about a YouTube content creator who encourages his followers to invest heavily in short stocks, has further sparked the meme stock debate.
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It’s been more than two years since meme stocks first made headlines, but are they still the place to put your money?
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What is meme stock?
The answer to this question: Meme stocks, or stocks heavily influenced by social media, became popular in 2021.
Meme stocks gained traction in part due to the influence of popular online forums such as the r/WallStreetBets subreddit. In these forums, users encouraged others to buy and hold large amounts of shorted stocks, and two of his most popular stocks were AMC and GameStop.
What followed was a meme stock frenzy in which the value of major meme stocks skyrocketed in a short period of time.
“The frenzy spread as social media discussions intensified, mainstream media attention and retail investors seeking to break through institutional controls were attracted,” Forbes reported.
Read: 8 Best Cryptocurrencies to Invest in in 2024
High risk, unknown reward
The problem with short-term speculative trading in short stocks is that the risk is high and the potential return may be unknown. Such stocks are usually considered to be risky gambles.
“excitement [of meme stocks] Since then, traders who bought the stock have declined, even if it hasn’t completely disappeared. [during the meme stock craze] It will now be in the deep red,” CNBC detailed.
As always, it is essential to do your due diligence when considering investing in a particular position. Falling victim to the herd mentality associated with meme stocks or becoming emotionally invested can often lead to losses.
GameStop vs. AMC
When debating whether to invest in GameStop or AMC, the best answer may be to invest in neither.
Meme stocks are volatile. Basically, you are investing your money and betting on the whims of the internet. The internet can be a fickle place. Celebrities and politicians can go viral and suddenly be viewed in an unfavorable light. Old tweets can resurface and destroy your career.
Investing in meme stocks (especially in this case, when many analysts suggest the bull market is over) and plowing money into what others are saying online can lead to losses.
“GameStop’s stock price has suffered a significant decline since the beginning of 2024, with the stock price down about 20% by February 6,” TheStreet detailed.
GOBankingRates Details
This article originally appeared on GOBankingRates.com: GameStop vs. AMC: Which Meme Stock Is a Better Investment Today?
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