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A Meme Stock Is Born: How to Spot the Next Reddit Favorite

  • Heavily shorted shares are a common theme among the group
  • The big stock-price gains often come alongside big drops
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Meme Stocks Sensation Shows No Signs of Slowing Down

Trying to keep up with the frenzied rise of so-called meme stocks might feel a bit like playing a game of whack-a-mole, bewildering analysts and investors alike.

While there’s no steadfast definition of what constitutes a meme stock, one common thread across the many names being pitched on social media is a focus on heavily shorted companies. Shares of Reddit icon GameStop Corp. jumped as much as 2,500% in January after day traders noticed its short interest had ballooned to record levels.