The top-trending stock on a well-known social media platform is Tesla stock (TSLA). Is it a meme stock, though?
Meme stocks may not be a good investment right now, but these speculative plays are renowned for their high degree of unpredictability because they have the potential to rise or fall at any moment and in any market. They often rely on online attention and social media buzz for their stratospheric ascent and heart-stopping falls.
These stocks do adhere to conventional financial knowledge, which states that you should choose stocks with a track record of rapid development and superior performance.
However, memes are also characterized by frantic price movement in some categories of really well-liked stocks, driving up values by 1,000% or more in a matter of seconds. And they are just as likely to crash.
The majority of these companies’ hyper-stock valuations are based on a young fan base and an anonymous following that can grow or shrink over night.
The Tesla stock increased 2460% between June 2019 and November 2021, going from 14.90 to 381.50.
The CEO Elon Musk’s enormous social media following, as well as speculative plays on Bitcoin and Bitcoin’s joke, Dogecoin, all contributed to the frenzy.
Tesla began to accept payments for cars with Bitcoin in February 2021 after purchasing $1.5 billion worth of the cryptocurrency. Following the news, the price of cryptocurrency skyrocketed, and Tesla’s third-quarter earnings revealed a sizable profit thanks to the increase in the currency.
In fact, Bitcoin sales accounted for $101 million, or almost 25%, of the quarter’s $438 million total income.
In October and November 2021, TSLA stock experienced the largest 12-day rise in its public history. Tesla also began to accept the popular meme token, Dogecoin, for a limited number of sales in January of this year.
Dogecoin’s price has increased further following the merger with Twitter. The coin has increased from 11 cents on October 30 to 15 in just two days.
As long as social media continues to have an impact on markets, meme stocks will exist. Investors must realize that the highly irregular price movement of these stocks frequently has nothing to do with fundamental or technical evaluations.
Featured Image- Unsplash @ David von Diemar
Author Valerie Remorosa