A “meme” is generally defined as “hilarious images, videos and texts that are quickly copied and disseminated by Internet users. Over the years, “memes” have evolved into a synonym for any private joke, and have become an important part of Internet culture.

"M" stocks - from GameStop stocks to AMC stocks - have become an exciting phenomenon in global stock markets, and these stocks driven by Internet forums have attracted attention and made many hedge fund managers feel their heads and think deeply as they try to tackle This new investment phenomenon.

What exactly are “meem” shares?

The "M" stock has gained popularity among retail investors through social media, and investors in such stocks are often young and inexperienced, between the ages of 12 and 18, and the "M" stock simply has no actual fundamentals or profitability.

In his article published by Wealthofgeeks, writer Jeff Fang said that the “meme” shares first emerged in January last year, when the share price of the American video game company, GameStop, rose by 1900% in January. Less than a month, spurred on by what was written on social media and online retail investor forums, then its price fell again by 90% as fast as it went up.

Stocks and memes

The writer wonders about the relationship of memes with stocks, as the memes started as funny pictures, but with the passage of time it spread to cover almost the crypto industry and many sectors in the global financial markets.

People start buying the stock, which leads to a rise in its price, and in this way, the meme is seen by more people, so that "special joke" becomes more fun, and attracts more attention, which prompts more people to buy the stock, which supports stock prices to rise even more .

Many rush to buy meme shares because they think it is a great opportunity to make millions, but it is a risky attempt (Getty Images)

Risks of investing in meme stocks

Elizabeth Graver wrote a report on the "CNBC" website, in which she pointed out many of the risks of investing in "M" shares.

The writer explained that many rush to buy meme shares, because they believe that it is a wonderful opportunity to make millions.

It may indeed be true, but you can also lose millions.

The author mentions some of the risks associated with meme stocks:

  • volatility

    Anything lacking in fundamentals will be volatile, just look at GameStop's stock performance over the past few months;

    Between January and March 2021, its price rose to $400 and later fell to $18.

  • Lacking support: M stocks usually try to implement a recovery plan.

    This often means that it has made little or no profit, and that many professional investors have shied away from trading it in the belief that its stock price will drop.

Reports indicate - for example - that the "GameStop" company - for example - has not made any profits during the last 3 years, and that investors were reluctant to trade in it in January, or trade shares of companies hostile to it, by more than 100 percent. % of its market share.

  • Noise: Because these stocks lack basics, their value increases only because of the noise surrounding them. Investors buy shares because they believe that others will catch up and start selling when they feel that others will start selling.

    This makes it impossible to be a safe investment.

Not only do you need to anticipate if the hype surrounding the stock will continue, but you also need to anticipate if the hype will fade soon (predict when to sell the stock).

These are tasks that the best psychologists, influencers and traders find very difficult to anticipate.

Meme stocks have taken over the internet in 2021, but it's important to note the risks before investing.

The author concluded the report that meme stocks - by definition - are risky and lack fundamentals.

Moreover, it also suffers from huge volatility and it is all based on the hype around it.

If you have the guts for all of that, then go and risk it by all means, but if not, other options should be considered for a better investment of your money.