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Lately more and more people are talking about meme stocks, but do you know what they are? Learn about what a meme stock is and how you can buy a meme stock.
We also discuss how it all started with AMC and how this won’t end anytime soon.
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What is a meme stock? Can I buy a meme stock? Who are all the meme stocks? What is all the hype around Virgin Galactic, Gamestop and AMC Entertainment?
All these questions are running around the minds of traders who have just been introduced to the idea of a meme stock. Today we will explain more about meme stocks!
Have you dreamt about making a 10x return overnight? Have you been trading for years and have never beat the stock market? Are you tired of stocks moving sideways for months on end? Today we will introduce you to meme stocks.
The term ‘meme stocks’ refers to stocks listed in the US market that are not necessarily a household name, that all of a sudden catch the eyes of individual investors or day traders because they’re the subject of massive social media attention.
All this attention causes the share prices to move erratically, in some cases making millions of dollars for your average Joe. This is the power of meme stocks. Hello AMC!
AMC Entertainment Holdings is an American movie theater chain headquartered in Kansas. If you didn’t know, AMC is the largest movie theater chain in the world. In short, AMC is the king of the jungle when it comes to movie theaters.
It was always ahead in terms of location, size of screen, size of seat, vip seating, etc. If you live in the US, whether you know it or not, you have probably been to an AMC theatre at some point in your life.
AMC was already a household name before it was a meme stock, but now, it seems like no one can stop talking about AMC and how rich they would have been if they had bought some shares in the company they love so much.
On the opposite end AMC became a meme stock because the big boys in finance thought the company was so poorly managed and had absolutely no hope for the future. These same people then massively shorted the stock in hopes that the price per share would drop close to zero. If that was to happen, then these big hedge funds and investment banks would make billions of dollars. And here comes the short squeeze!
The truth behind what happened with AMC is fairly simple and straightforward. A classic short squeeze.
There was massive short interest in AMC, as we explained above, and on the other side a group of people who are just as smart found out if they buy enough shares the share price will skyrocket and would make them millions.
Essentially you are squeezing the people who shorted the stock in the first place, eventually forcing them to also buy the stock, pushing the price even higher. And here comes Reddit thread Wall Street Bets, a page on the social media platform with millions of followers used for speculating on stock prices.
Since the pandemic had started people were forced to look for alternative ways to make money, and this was the perfect chance, stock trading.
The stock market became one of those places that drew a lot of attention. It was one of those places where people started to make a lot of money. When you put that alongside the insane power of social media today, you have a new world of trading.
Enough convincing was done on Wall Street Bets to push the average retail investors to buy shares in AMC.
Slowly, day after day after day of buying stock in AMC, it finally happened, the unthinkable became reality, the average investor beat Wall Street.
AMC shares skyrocketed from $10 to around $60 in the space of a month. And just like that, AMC became a meme stock.
The number one error retail traders make when buying stocks is not doing their homework. Is buying a meme stock risky? Of course it is risky. But so are a lot of other stocks that aren’t meme stocks.
We always encourage our readers to do further research and we also encourage our readers to put in the hard work. If everything was so easy, everyone would be rich.
Buying a meme stock today is easy. Opening a brokerage account today is also easy. But, is it the right thing for you to do? Only you can decide. Take a look at your portfolio and see if you can take on more risk. Are you a short term trader or a long term trader?
Figure out your risk appetite and see if buying a meme stock is suitable for you. You can make a lot of money and you can also lose a lot of money. Please trade responsibly. At the very least you know what a meme stock is!
With Baxia Markets we make it very easy for you to get started with your trading journey, even for beginners to trading.
Feel free to reach out to us via chat, email or call and we will be more than happy to help you get started. Our dedicated and experienced Account Managers will make sure you have all you need to get started in a swift manner.
Baxia Markets offers both Demo and Live Accounts so that we can accommodate all levels of traders.
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