The carnival of retail investors, the reincarnation of the market: Why did the meme share frenzy start over and over again?

The financial market has once again been swept by the “meme stock” craze.

The Zhitong Finance App learned that in mid-July, driven by social media buzz and a sudden influx of retail investors, a number of seriously shorted stocks, including Opendoor Technologies (OPEN.US), KSS.US (KSS.US), and Krispy Kreme (DNUT.US), suddenly burst into crazy gains.

The sharp fluctuation of these stocks — some stocks quickly plummeted after a sharp rise — was not due to fundamental changes, but because they became a hot topic of conversation among social media influencers. Similar to the previous meme stock boom, the targets selected were all companies that were struggling to operate. Influencers packaged these companies as “civilian heroes” against Wall Street elites.

This scene is similar to the initial “meme stock” frenzy in 2021 — at the time, the stock prices of GME.US (GME.US) and AMC (AMC.US) soared due to a wave of trading frenzy, driven by well-known Reddit users.

These meme-driven surges can result in multi-billion dollar windfalls — but they often mean huge losses for afterthought followers.

Why did the fandom start over and over again?

“Meme stocks” usually have several characteristics in common: first, they stimulate the collective imagination of netizens, and secondly, they gain influence from retail investors to create momentum on social media. Related tweets are often accompanied by infographics or videos incorporating pop culture elements. (i.e. “Meme”).

Buying these stocks is regarded as a medal of honor or a ticket to join a club, and investors encourage each other to buy chips. Successive meme stock booms have involved well-known consumer brands, such as Game Station and AMC in 2021, as well as Opendoor, Krispy Kreme, action camera manufacturer GoPro (GPRO.US), and artificial meat company Beyond Meat (BYND.US) in the current boom.

Additionally, these stocks usually have a high short selling ratio — meaning professional investors are shorting — and the unit price per share is often lower.

How is it different from the time of the pandemic?

The market environment in 2025 is fundamentally different from 2021. During the pandemic, investors quarantined at home held government stimulus checks and exchanged stock selection experiences on social platforms. However, the current market is facing adverse factors such as high interest rates and uncertainty about tariff policies, which should have curbed risk appetite, but the speculative sector of the market is once again active.

Although the number of stocks involved in this round was less than in 2021, the fluctuations were more intense and the gains were brief. Take Opendoor as an example: the stock soared 43% on July 21, and the trading volume reached 1.9 billion shares on the same day, accounting for about 10% of the total stock trading volume in the US. The surge in options trading volume fueled this wave — more than 3.4 million contracts changed hands on the same day, even surpassing the single-day peak during GameStop's surge in 2021.

Companies such as Kohl's and Krispy Kreme soared due to shorting (when shorters are forced to buy back stocks in order to close positions, they push up stock prices). However, Krispy Kreme's gains did not last — after opening with a 39% surge on July 23, the closing increase narrowed to 4.6%.

What is the risk of meme stocks?

This type of transaction is extremely risky because the motivation for the purchase has little to do with the company's fundamentals. Drastic fluctuations in stock prices have also increased trading risks, which are particularly dangerous for those who are inexperienced.

GameStop's stock price has dropped more than 70% from its peak in January 2021, and AMC has plummeted nearly 99% from its June 2021 high.

Why is the “meme stock” boom breaking out?

The inexplicable rise in consumer companies' stock prices can usually be traced back to trading chat rooms such as Discord forums, Reddit communities, or StockTwits. The 2021 GameStop craze began with a bullish post from influencer trader “Roaring Kitten” Keith Gill.

In the midst of this wave of markets in July 2025, Eric Jackson, founder of EMJ Capital, a Toronto hedge fund, continued to post and sing Opendoor on the X platform, which sparked a buzz among retail investors. The stock then appeared on the StockTwits Hot Deals list and was frequently mentioned on Reddit's WallStreetBets section.

Is it suspected of breaking the law?

Although the US Securities Regulatory Commission (SEC) is cracking down on illegal market manipulation, it is necessary to prove the perpetrator's subjective intention. If someone deliberately raises stock prices and profits from it, it may be illegal for them to talk too much.

Social media influencers continue to have ethical disputes affecting stock prices. The questioner pointed out that meme stock drivers often do not disclose key information, such as position size, transaction timing, and whether to charge promotion fees. Supporters, on the other hand, believe that there is no essential difference between aggressive investors pushing for reforms or short selling reports issued by short selling agencies.

Why is it always fleeting?

If the meme stock boom is to continue, it is necessary to continuously attract new investors to enter the market, thereby boosting more speculative capital. This model worked well during the heyday of Meme shares in 2021 in line with the pandemic lockdown, but now it is unsustainable.

AMC's gains in May 2021 came to an end after only two days. Faraday Future (FFAI.US) surged from $0.04 to nearly $4 in a week in 2024, but fell back into the ranks of fairy stocks in less than two weeks. The recent small boom was even more fleeting — in part because Wall Street institutions have developed strategies to quickly identify and respond to such fluctuations, which often led to a rapid standstill in gains.

Although the core driving force behind the rise in meme shares is the emotional catharsis of retail groups against Wall Street, as shown in the results of AMC and Game Station in 2021, corporate fundamentals will eventually return to dominance, and the carnival will always end.