Memes Can Be Good for Business

One theory of meme stocks is what you might call “technical.” This theory is: If a lot of people on social media decide to buy the same stock, it will go up. If it goes up, the people who bought it will make money. Therefore, they should buy it, to make money. There are flaws in this theory (eventually you run out of buyers), and more complex variations on it (short squeezes, gamma squeezes, etc.), but the important point here is that this theory is essentially self-referential. You buy meme stocks for the meme; you make money because the meme is popular, because people buy the stock. The actual business of the company is not particularly relevant. A certain sort of consumer-facing, nostalgia-driven business might be helpful for the meme: If stock investors are more likely to buy stocks with nostalgic associations, those stocks will be more meme-friendly. But the meme-stock effect will not work through, like, increasing quarterly profit margins. It will work through memes.

Another theory of meme stocks is what you might call “fundamental.” This theory is: If a lot of people on social media decide to buy the same stock, it will go up. If it goes up, the company will improve. It will make more money and become more valuable, retroactively justifying the people who bought the stock. The meme attention will cause improvement in the underlying business.