The purpose of this post is to discuss the meaning and usage of the term “meme stock”.

What is a meme stock?
Doing a quick internet search provides several results.

Here are some descriptions provided from various sources.

From Wikipedia: “A meme stock is a stock that gains popularity among retail investors through social media. The popularity of meme stocks is generally based on internet memes shared among traders, on platforms such as Reddit’s r/wallstreetbets. Investors in such stocks are often young and inexperienced investors. As a result of their popularity, meme stocks often trade at prices that are above their estimated value on the basis of fundamental analysis, and are known for being extremely speculative and volatile.”

From The Economist: “The stock of American video game retailer GameStop has been one of the most popular meme stocks,”

According to this source:
“American video game and electronics retailer GameStop is regarded as the first meme stock.” “Meme stock losers include consumers who buy into meme stocks at their peak, only to see them fall, The Balance notes.”

Investopedia: “GameStop (GME) is widely regarded as the first meme stock,” “Are Meme Stocks Real Investments?”

“The short squeeze that The Roaring Kitty had suggested took place in earnest, with the price of GME shares exploding to nearly $500 amid a frenzy of short-covering and panic buying.”

Conveniently does not mention the part of the story where brokerages colluded to shut off the buy button.

"The Bottom Line: So-called meme stocks became a hot investment theme for day traders and retail investors early in 2021, resulting in short squeezes on hot stocks at the time such as GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC). Named after the virality of internet memes found on social media, these stocks saw online communities form around them to boost and hype their prospects, even though meme company fundamentals remained questionable. " Online communities? Which online communities? I’m under the impression that the only place that exists is wallstreetbets.

This article says: “The excitement to make a large amount of money in a short period of time can be enormously tempting – therefore, investors may sometimes resort to meme stocks, succumbing to that temptation.” “The first widely acknowledged meme stock was GameStop Corp” “There may be a few reasons why investors have jumped onto the meme stock craze. The first is that many hope to make a large amount of money in a short period of time.” “The biggest risk with a meme stock is losing all of your money.”

CNBC article is titled: “Meme stocks: What are they and why you should be careful buying them” “Perhaps the most famous was the WallStreetBets Reddit thread that encouraged people to buy GameStop and AMC Entertainment stock at the beginning of 2021.” “the reality is that the odds are heavily stacked against anyone trying to outsmart the market” “The meme investors who walked away with a lot of money were arguably just very lucky. This kind of trading is ultimately not that much different than gambling.”

This article: “What are meme stocks? Meme stocks are a battleground.” “Thus, a meme stock is a shared investing idea imitated by other investors.” “Video game retailer GameStop is recognized as the first meme stock.”

On May 31 2022, the Securities and Exchange Commission (SEC) posted a video titled “Investomania: Meme Stocks”

In the clip, there is a unsure contestant that has to choose from a selection of supposedly poor choices, including “stocks on margin”, “guaranteed returns”, “stock tips from your uncle”, “fomo”, “crypto to the moon”, “tulip bulbs”, and “timing the market”. Clearly this is a collection of terrible investment strategies, and because “meme stock” is one of the options in this group of terrible investment strategies, meme stocks are therefore a terrible investment strategy. The contestant chooses meme stocks and loses all of his money and gets a pie to the face, and everyone laughs at him. It’s a total humiliation for this loser that lost all his money. The contestant later learns that he could have done research, and this presumably would have prevented him from making such a terrible choice.

In conclusion, the SEC is saying here that if you invest in meme stocks, you didn’t do your research, you will lose all of your money, and it will be humiliating. Stay away from meme stocks, says the agency of the United States federal government that exists to enforce the laws against market manipulation. Logically, since GameStop is a meme stock, you should therefore stay away from GameStop.

Superstonk thread about this

On October 26, 2022, Fidelity posts “Meme Stock Guy”.

Fidelity created a post on their LinkedIn page showing different types of costumes for different types of “traders”, one of those costumes was Meme Stock Guy. OP of the superstonk post puts it well: “The whole post seemed padded out to get to the one punchline of making the meme stock investor look like a neckbeard loser.”

Interestingly, Fidelity’s Meme Stock Guy is brandishing a purple circle on his phone, a symbol that is exclusively used by DRS’d shareholders of GME. They titled it “Meme Stock Guy”, but what they are actually showing here is their image of what could have been titled “Directly Registered Shareholder of GameStop”. If you invest in GME and directly register your shares, Fidelity wants you to know that they think you are an unattractive loser. Very mature and fair and unbiased behavior from a very serious incumbent financial institution with trillions of dollars of assets under management.

On June 6, 2023, CNBC publishes their “documentary” Making of the Meme King, a piece about Ryan Cohen, executive chairman of GameStop. This documentary features Brandon, a real person and a real victim of meme stocks. Brandon lost all his money and his life is a sad depressing mess because of meme stocks.

(Interesting side note: this CNBC article on June 7 mentions the existence of superstonk, and to my knowledge may be one of the first actual direct acknowledgements of that subreddit by CNBC)

From the sources provided that attempt to define what a meme stock is, it is clear that a meme stock is:

  • Not a legitimate investment
  • Has popularity exclusively because of online hype about it and not for any reason of any legitimacy
  • Investing in meme stocks is not investing at all but rather it is gambling
  • You will lose all your money if you invest in a meme stock
  • Meme stock investors are often young, inexperienced, unintelligent, unattractive, unhygienic, didn’t do their research
  • GameStop is widely considered to be the first and primary meme stock

The takeaway that I am getting from all this is that you probably shouldn’t invest in GameStop, because it is just a meme stock, and a meme stock is something that is bad.

The reality

“Meme stock” is an incantation. It is a term used in financial propaganda and other contexts, not unlike political buzzwords du jour, for the purpose of delegitimizing those people that are associated with it.

From the wikipedia page Propaganda techniques:

“Guilt by association or Reductio ad Hitlerum - This technique is used to persuade a target audience to disapprove of an action or idea by suggesting that the idea is popular with groups hated, feared, or held in contempt by the target audience. Thus if a group that supports a certain policy is led to believe that undesirable, subversive, or contemptible people support the same policy, then the members of the group may decide to change their original position. This is a form of bad logic, where A is said to include X, and B is said to include X, therefore, A = B.”

“Meme stock” conveniently has an ambiguous meaning that may or may not be referring specifically to GameStop, depending on the context.

When the term meme stock is used, the implied logic is:

  1. Meme stocks are bad, and illegitimate, and meme stock investors are illegitimate and invalid.
  2. There’s a discussion about GameStop? GameStop is a meme stock.
  3. Therefore, GameStop is a bad investment that is viewed favorably only by investors that are illegitimate and invalid.

Something I found particularly interesting while putting this post together was the quote above that “Meme stocks are a battleground,” a statement which is unironically true in a certain context.

The term “meme stock” is an effective propaganda tool that allows the opponents of GameStop to disparage and delegitimize GameStop and GME investors, without necessarily mentioning GameStop or GME at all. It is a term often used by incumbent institutions to uphold particular narratives, particularly the narrative that GME is not a legitimate investment.

Despite that CNBC, Fidelity, the SEC, and others are all undoubtedly aware that GameStop investors subsequently moved on from wallstreetbets well over 2 years ago, they all continue to deliberately ignore, with very few exceptions, the reality that places like superstonk exist, that GameStop investors have learned of and have embraced DRS, and instead they continue to simply explain all of this reality away by propagating the term meme stock.

The propaganda of meme stock means that the GameStop story started in wallstreetbets, and that’s where it ended. There are no other subreddits relevant to GME. DRS is not something that GameStop investors have embraced, and for that matter is not something that even exists at all. There does not exist an argument for why GameStop might be a legitimate investment. Naked short selling is not something that is relevant to meme stocks, or for that matter something that really exists at all. Okay maybe it exists, but it is irrelevant and inconsequential. The GameStop Short Squeeze™ that happened in January of 2021 ended because the stock was overvalued and the degenerate gamblers eventually lost interest, the fact that brokers colluded to shut off the buy button is irrelevant and had nothing to do with it and is not really worth mentioning.

TLDR: The continued use of the term “meme stock” is part of the ongoing effort that is happening to this very day, by financial institutions as well as the propaganda outlets that support them, for the purpose of delegitimizing GameStop and GameStop investors. The usage of the term meme stock typically goes hand in hand with the deliberate omission of any representation of GME as a legitimate investment.