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
This article is for subscribers only.
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.