MassMutual

Dec 31, 2024

Today at 2:16 a.m. byScott Sowers The Washington Post FILE - In this image from video provided by the House Financial Services Committee, Keith Gill, a GameStop investor, also known in social media forums as Roaring Kitty, testifies during a virtual hearing on GameStop in Washington, Feb. 18, 2021. The man at the center of the meme stock craze during the pandemic returned to the social platform X for the first time in three years Sunday, May 12, 2024, and sent prices of those stocks surging overnight. Keith Gill, better known as “Roaring Kitty” on the social media platform formerly known as Twitter, posted an image on Sunday of a man sitting forward in his chair, a meme used by gamers when things are getting serious. (House Financial Services Committee via AP, File) Wall Street has a long history of being easily spooked and fooled into panics, sell-offs, run-ups and bubbles. And meme stocks are especially prone to the whims of market-based hearsay. The GameStop frenzy in 2021 is one of the most famous examples, but 2024 saw continued hype over meme stocks across a range of industries, as well as those tied to the presidential election. A meme stock is a colloquial term for equity shares in a company that catch fire by way of social media. Their investors often tout them as undervalued or overlooked by the traditional financial community, while detractors typically dismiss them as a function of internet hype as opposed to sound financial fundamentals. GameStop -- a retail chain that sells video games -- is often cited as the poster child for meme stocks. When the GameStop phenomenon began in 2019, its champion, Keith Gill, held a day job with MassMutual in Massachusetts as a financial marketer and educator. In his spare time, he worked under the Wall Street radar, using "Roaring Kitty" as an alter ego while posting updates on X, YouTube and Reddit. Gill parlayed a $53,000 investment in GameStop stock into a $48 million position by 2021. The story was adapted into a Hollywood film, "Dumb Money," and led to congressional hearings to investigate charges of market manipulation. Eventually, state financial regulators fined MassMutual $4.75 million for failing to supervise Gill's after-hours trading. Gill has since resigned from MassMutual but has otherwise stayed active as a trader. In May, after a three-year social media hiatus, he revealed a $260 million position in GameStop stock. GameStop aside, other meme stocks have gone up and down as new contenders rise and fall. A handful of firms typically rise to the top of the meme radar screen, including current winners SoFi Technologies, Palantir Technologies, Coinbase and Netflix, along with electric vehicle makers Tesla and Rivian. Meme stocks seem to spark investors' imaginations via the allure of quick access to vast wealth. Their rise has been helped by the digitization of Wall Street, which is often traced to the formation of the National Association of Securities Dealers Automated Quotations (Nasdaq) exchange in 1971. Commissions on stock trades were deregulated in 1975, and online trading platforms sprang up in the 1990s -- two developments that shaped trading in the internet age. These days, social media is the gasoline fueling the meme-stock fires. Gill reached an especially receptive audience through Reddit, an online electronic bulletin board with thousands of tentacles called subreddits. Gill posted on the subreddit "r/WallStreetBets," also known as "WallStreetBets," or "WSB," which now has 17 million subscribers. Even if they don't yield astronomical fortunes, meme stocks appeal to investors seeking higher returns than what they would find with safer bets like money market funds and index funds that follow market trends. The possibility of outsmarting Wall Street keeps the hopes and dreams of meme-stock investors alive. This year, when the tide of a robust bull market lifted most stocks, many memes also did well. But Bed Bath & Beyond -- which had its moment as a meme stock in 2021 -- is a reminder of what can go wrong. Once highly touted, the company slid into bankruptcy, taking its investors with it, and was eventually delisted from the New York Stock Exchange in 2023. Debating meme stocks has become a part of pop culture, especially for those interested in the world of finance. Quarterly earnings reports and current events can instantly turn into stock-price swings that can make or break a retail trader's portfolio. When an influencer weighs in and begins pumping a stock, prices can start spiking, which draws in more investors. The meme-stock world also comes with its own jargon. Its investors call themselves "apes," who may have "diamond hands," which refers to their ability to hold onto a stock even after precipitous drops -- or "paper hands," which means the opposite. In the broader market, though, meme stocks are often viewed as a sideshow populated by day-trading amateurs, while the major banks and large investment firms do all the heavy lifting. President-elect Donald Trump is having his own meme-like influence on stocks. His media firm, TrumpMedia and Technology Group, surged to $70 a share in the spring but eventually fizzled, falling to $13 in September. It has since recovered to around $36, but the company continues to struggle, reporting in November losses of $19.2 million in the third quarter. Trump's alliance with Elon Musk can also be seen as an influence. Tesla began the year at about $250 a share, fell to around $140 in the spring, then soared close to $480 in December, thanks in part to a reported jump in revenue. The yearly gains of some other meme stocks are also eye-popping. Palantir Technologies went from about $16 a share in January to over $80 in December. Coinbase had dropped to $115 in early February, and by early December it had soared to about $340. For comparison, the S&P Index, which tracks the stock performance of 500 of the largest publicly traded companies, started the year at about $4,700 and cracked the $6,000 mark in November. In bullish times, everybody looks like a winner. Advertisement All rights reserved. This document may not be reprinted without the express written permission of Arkansas Democrat-Gazette, Inc. Material from the Associated Press is Copyright © 2024, Associated Press and may not be published, broadcast, rewritten, or redistributed. Associated Press text, photo, graphic, audio and/or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. 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