{"id":1283,"date":"2021-07-05T09:35:07","date_gmt":"2021-07-05T09:35:07","guid":{"rendered":"https:\/\/www.theirmindia.org\/blog\/?p=1283"},"modified":"2026-02-14T18:21:02","modified_gmt":"2026-02-14T18:21:02","slug":"risk-of-meme-assets","status":"publish","type":"post","link":"https:\/\/www.theirmindia.org\/blog\/risk-of-meme-assets\/","title":{"rendered":"Risk of Meme Assets"},"content":{"rendered":"

\"Getting<\/a><\/p>\n

With the onset of the year 2021, the meme stocks have, yet again, been witnessed creating hysteria among the investors. The sharp rise and dramatic falls were seen creating headlines for a considerable amount of time. However, courtesy of the dynamic range of pre-existing and rapidly launching stocks in today\u2019s era, the impact of meme stocks on the overall market is rather minute.<\/p>\n

Before going ahead with the issue, it\u2019s necessary to know what meme stock or meme asset really is- <\/strong>A meme stock is one that has gone viral or is insanely amplified over social media, the reason being not the company\u2019s performance but the hype created on social media platforms like Reddit. The unreasonable hype of meme stock trading has led to these stocks becoming overvalued and simultaneously escalates their prices in the broad market<\/p>\n

Misty Lynch, financial advisor and certified financial planner<\/strong> with Beck Bode once said in one of the emails to The Balance, \u201cIt is really a category for stock that has seen rapid growth and attention on social media channels like Reddit and Twitter. The valuation may not line up with the price changes\u2014or the hype.\u201dSource: www.thebalance.com<\/p>\n

Blackberry, a stock that had been far behind in the line for several years now,<\/strong> observed a spike three times its original numbers around 25 January 2021. To add to this amazement, AMC rose by about ten folds. However, the star performer amid all these meme stocks was the GameStop, the virality of which increased its value by hundreds of dollars in a matter of few days.<\/p>\n

Working of a Meme Asset<\/strong><\/p>\n

Since the stupefying sky-high value of these assets is not a result of how the company performed but an insane work of word of mouth all across the social media platforms like Reddit, the nature of these spikes is rather fluctuating<\/u><\/strong> – so much so that, after a point, there ceases to exist a reasonable linking between the groundwork of the company and the estimation of its stocks in the market.<\/p>\n

Two of the leading causes as to why meme asset mania has been the talk of the town lately are :<\/p>\n