Meme Stocks Plummet: Reddit Traders Latest Victim Of Market Volatility

In what is becoming a winter of financial loss for Reddit’s WallStreetBets forum, meme stocks represent the most recent episode. It comes as benchmark interest rates are predicted to rise soon and rapidly. This has meant a drop in interest towards riskier assets with long-deferred pay-outs – meaning that meme stocks such as GameStop have been shuttled into a brutal sell-off.

Reddit traders watched as GameStop fell by 35 per cent during January, including a catastrophic drop of 11 per cent on Monday 24th.

What Are Meme Stocks?

Notorious for their cult-like following, meme stocks are the shares of a company that online forums and communities have adopted and promoted across social media platforms. Their popularity is mostly governed by internet memes shared amongst the traders.

The primary platform of meme stocks is Reddit, usually found on r/wallstreetbets. While it could be said that many investors in meme stocks are recognised by seasoned investors as young and inexperienced, the concept has grown rapidly and become something of an empire online.

A sudden interest in a meme online on social media can cause a price to skyrocket in just a short period, sometimes as short as days or even hours.

What Is GameStop?

Put simply, GameStop is an American retailer of video games, gaming merchandise, and consumer electronics headquartered in Texas. It is the largest retail gaming and trade-in site in the world for PlayStation, Nintendo, and XBox.

GameStop is the original meme stock and continued to be one of the strongest and best performers in 2021, increasing to $152.14 in shares (^707%). As it became another user-trader for NFTs, GameStop looked as though it was going to enter 2022 on the high it had made for itself.

This time though, stocks have fallen again and big investors are finding themselves deep in the red. Many are claiming “this time is different” but seasoned investors are taking this for the warning it is and leaping out early. On Wall Street, no time is different.