If you’ve spent any time on the internet over the past few years, you’re probably familiar with memes – funny social media posts that quickly go viral. The concept of meme stocks has entered investment vernacular over the past few years. Simply put, these are trendy stocks that tend to be popular with millennials. Today we’ll discuss the best meme stocks on the market and how to invest.
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What Are Meme Stocks?
Meme stocks are a unique concept that have come to prominence in the last decade or so. The term is a reference to a specific type of viral social media post.
A meme stock is a stock that becomes trendy at a very quick pace. Investors tend to buy them based on hype and emotion, instead of logic and financial statistics. These companies often become popular because they have the potential to innovate in the future, as opposed to doing something
Meme stocks tend to experience a lot of volatility. Their value can shoot up quickly when something exciting happens with the company. However, traders tend to panic and sell the stock with little provocation.
Millennials love meme stocks, and tend to be the demographic that drives their fluctuations. This generation have recently become much more active investors due to online commission free investment platforms like WeBull. Established firms like Charles Schwab and TD Ameritrade have also added online investment tools in recent years.
Online platforms have made it much easier to make quick investment decisions. This has had a huge effect on the way people build their portfolios, and has led to the prominence of meme stocks.
These meme stocks have been further perpetuated by social media platforms like Twitter and Reddit. Online hype can drive some people to purchase a stock without fully researching its financials.
These stocks tend to fluctuate as a result of public sentiment. However, savvy investors can still make money by trading these meme stocks – it’s all a matter of timing.
Best Meme Stocks To Buy
Tesla (NASDAQ: TSLA)
Tesla is arguably one of the most well-known meme stocks out there. Celebrity entrepreneur Elon Musk has a way of pushing this company into the limelight – and it’s reflected in their share price. Investors have flocked to Tesla this year, resulting in massive share growth.
Tesla makes electric vehicles and other clean energy technology. Climate change is becoming an increasingly pressing global problem. Consumers have reacted with huge demand for emissions-free vehicles.
Most other car companies saw their stock price dive as a result of the pandemic. This wasn’t the case for Tesla. Their shares have skyrocketed this year. The S&P 500 added them to their index in December 2020, driving even more growth.
Tesla’s shares are up exponentially even in a tough period for the stock market. Despite the hype, you’ll want to be cautious when adding this company to your portfolio, as it may be overvalued.
The best strategy here is to wait for a dip in their stock price. With all of their innovative technology and iconic cars, there’s still plenty of hope for future growth with this company.
Advanced Micro Devices (NASDAQ: AMD)
Advanced Micro Devices makes computer processors that are essential for the production of smartphones, laptops, and other electronic devices.
While AMD’s share prices had been on the way up for a long time, they saw a huge spike in mid-2020. Many people started to realize just how important these electronics were to our daily lives.
Like many other meme stocks, AMD’s shares have fluctuated since their initial spike over the summer. Thier price to earnings ratio indicates that this stock is on the expensive side.
However, AMD has seen excellent revenue performance this year. Their yearly revenue has grown by nearly a third when compared to 2019. Much of this is due to higher demand for gaming devices. With more people staying home this year, many have turned to video games as an escape.
While AMD has experienced the explosive growth of a meme stock, it could actually serve as a great long term portfolio addition. This is because they continually update their processors to keep up with demand and technology. Because of this, their stock could easily continue to grow over time.
BioNTech (NASDAQ: BNTX)
The coronavirus pandemic completely changed the world in 2020. There has been huge demand for a vaccine that could help life return to normal. Many biotech and pharmaceutical companies that worked on vaccines saw their stocks go up dramatically as a result.
BioNTech is a German company that worked with Pfizer to develop a COVID-19 vaccine. This vaccine has been the most successful one so far to hit the market. The United Kingdom authorized the vaccine for emergency use in December 2020. 15 other countries followed suit.
It’s likely that many other countries will authorize this vaccine in the coming months. Over 4 million people have received the first dose of the vaccine around the world.
The BioNTech stock has received enough hype this year that it would definitely qualify as a meme stock. However, there’s real potential to back up that hype.
It’s likely that millions more people will take this vaccine in the next few months. Countries around the globe are making huge orders. With that in mind, it’s hard to believe we have seen the last of this stock.
In fact, now might be the best time to buy. The BioNTech stock just saw a slight dip, so Wall Street investors can get in now for great returns later on.
Meme Stocks: Final Thoughts
Meme stocks may seem like they are all hype, but that doesn’t mean you should count them out. The key is to check the company’s financials before buying any shares to make sure they have long term potential.
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