Investing Theory

Top 3 Meme Stocks to Add to Your Portfolio in 2024: Smart Picks for Trending Trades

October 12, 2023

Looking to spice up your stocks with the “top 3 meme stocks to add to your portfolio in 2024”? Whether for potentially high returns or simply the allure of trending assets, these stocks are chosen for their explosive presence in the market and the conversations surrounding them.

This concise guide cuts through the noise to bring you actionable insights on best meme stocks to buy that are as entertaining as they are speculative.

Meme Stocks: a Trend or Thoughtful Investment

Meme stocks refer to shares of companies that have garnered widespread attention, typically propelled by social media platforms and online communities like Reddit. Retail investors, driven by social media hype, flock towards these stocks, creating a stark contrast with traditional investments that rely on a company’s fundamental worth or growth potential. Despite their popularity, meme stocks are often seen as fleeting trends rather than sustainable investment pathways, raising questions about the long-term sustainability of continually investing in these stocks.

Best meme stocks: definition.

Nevertheless, the soaring prices of certain best meme stocks have lured many investors into participating. As these stocks surge higher, often driven more by bullish market sentiment than by average or good fundamentals, they become the top meme stocks to buy. But as the stock market has shown time and again, what goes up must come down. So, while the stock prices of these securities mentioned may rise dramatically, they can also plummet just as quickly after the stock surged.

Popular Meme Stocks: a Bright History

The rise of meme stocks is a phenomenon closely tied to the dynamics of online communities, social media, and the democratization of investing. Here's a brief history:

  1. Early Online Communities (Pre-2010s): Online forums and communities, such as Reddit, began discussing and sharing investment ideas. However, the influence on stock prices was limited compared to traditional financial channels.
  2. Social Media and the Rise of Retail Investors (2010s): The advent of social media platforms like Twitter and stock trading apps, empowered a new wave of retail investors. These platforms facilitated the rapid dissemination of information and investment strategies among individual traders.
  3. GameStop (January 2021): The meme stock phenomenon gained widespread attention with GameStop (GME). Retail investors, coordinated through online forums like WallStreetBets on Reddit, collectively targeted stocks with high short interest, such as GameStop. The stock's price skyrocketed, causing significant losses for some hedge funds and institutional investors who had shorted the stock.
GameStop stock saga; source: Yahoo Finance

Psst... Here we have a special stock trivia for you :) The person who is, in a way, behind Game Stop is Keith Gill, famous for using a rather complicated excel for his stock analyses - you can preview it in his video. At the same time, we remind you that at Scrab we have already solved the problem of simplifying such analysis - and we encourage you to try our fundamental scoring. 💪🔥

  1. AMC Entertainment and Others (2021): Following GameStop, retail investors turned their attention to other heavily shorted stocks, including AMC Entertainment (AMC). These stocks experienced extreme volatility as social media-driven buying frenzies clashed with traditional market dynamics.
  2. Regulatory Scrutiny and Market Impact: The surge in meme stocks prompted regulatory scrutiny and raised questions about market manipulation. Brokerages faced backlash for restricting trading in certain meme stocks during periods of extreme volatility.
  3. Ongoing Phenomenon: The meme stock trend continues, with various stocks periodically capturing the attention of online communities. Retail investors, often acting collectively, can influence stock prices through coordinated buying efforts, challenging traditional notions of market efficiency.

The history of meme stocks reflects the evolving landscape of retail investing, the power of online communities, and the impact of social media on financial markets. As this trend continues, it remains a dynamic and unpredictable aspect of the modern stock market.

Risks and Rewards of Investing in Meme Stocks

The act of investing in meme stocks presents a blend of risks and rewards. The inherent volatility and hype of these stocks frequently result in significant price fluctuations. On the other hand, diversification and effective risk management can help balance the potential rewards with the inherent risks, offering a potentially profitable venture for those willing to navigate this dynamic landscape.

Certain meme stocks gained attention amid the euphoric market rally in 2021. Some are gaining on the latest high social media interest. That is why it is so important, especially for these stocks, to be up to date with all news and trends.

Volatility and Hype: Navigating the Meme Stock Landscape

Meme stocks are notorious for their high volatility, primarily a result of price shifts driven by social sentiment instead of company fundamentals. The rapid dissemination of information and the viral nature of memes on social media platforms can lead to a rapid inflation of a stock’s value, often driven by social media influence rather than company performance, cash flow, upside and other financial metrics.

Thus, investors eyeing meme stocks should remain conscious of the potential for significant losses and the necessity of dedicating only a minor portion of a balanced portfolio to such stocks. While the potential for quick gains can be alluring, it’s crucial to bear in mind that a stock surging higher is not always reflective of a company’s financial health or its long-term potential, such as having a zero debt balance sheet.

Diversification and Risk Management: Balancing Your Portfolio

When venturing into meme stocks, portfolio diversification is a key strategy. Given the highly volatile and unpredictable nature of meme stocks, diversifying one’s portfolio with various stocks or index funds can effectively distribute the risk and safeguard the overall investment. Investing in exchange-traded funds (ETFs) that offer exposure to a diversified basket of meme stocks can also help manage risk and take advantage of stock price rises across multiple stocks.

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This functionality enables quick comparisons between ETFs covering the same countries or industries. You can promptly identify which ETF includes companies with the highest average margins, lowest debt, or fastest revenue growth.

These metrics are automatically calculated at the ETF level, eliminating the need to individually assess dozens or hundreds of companies within it.

ETFs' features available in the Scrab tool.

However, it’s important to understand that investing in such stocks can significantly affect the balance of your portfolio. These stocks are often influenced by social media hype rather than the company’s financial performance, leading to potential overvaluation. While there is a possibility of substantial gains, investors also face a higher risk of significant losses, emphasizing the importance of risk management.

How to Buy Meme Stock: Platforms and Strategies

Entering the world of meme stocks necessitates a thoughtful approach. This involves employing effective trading strategies to maximize potential gains, as well as finding suitable attractive meme stocks to buy.

Especially since the choice is huge: from creations such as flying car stock (Vertical Aerospace) to... craft beer business.

Trading Strategies for Meme Stock Success

The trading of meme stocks requires a distinctive strategy that takes into account their inherent volatility and the sway of social media trends. Some investors may choose to employ a buy and hold strategy for stocks, purchasing and retaining these stocks for the long term, relying on sustained social media buzz rather than conventional corporate performance.

Day trading, on the other hand, is well-suited to the rapid price fluctuations that characterize meme stocks, as traders engage in buying and selling these stocks within the same day to capitalize on short-term market movements. Contrarian investing, which involves selecting meme stocks that are currently out of favor or undervalued by the market, can also be an effective strategy in trading such stocks.

Top Meme Stocks to Consider in 2024

As we venture further into the realm of meme stocks, here are some of the best stocks to consider in 2024:

  • Coinbase Global Inc: a rising meme coin with high growth potential
  • Virgin Galactic: a space tourism company
  • Polestar Automotive: an electric vehicle contender gaining traction in the market

Coinbase Global Inc (COIN) – The Rising Meme Stock with High Growth Potential

Coinbase Global Inc is a publicly traded company that operates a leading cryptocurrency exchange platform. Founded in 2012, Coinbase provides a user-friendly interface for buying, selling, and managing various cryptocurrencies, including popular ones like Bitcoin, Ethereum, and others.

Coinbase Global Inc (COIN): revenue (quarterly YOY Growth), COIN (consensus recommendation), annual actual revenue, revenue estimates for next fiscal year, revenue estimates for 2 fiscal years ahead, revenue estimates for current fiscal year, screens from the tool.

The platform caters to both individual retail investors and institutional clients, offering a range of services such as cryptocurrency trading, custody solutions, and educational resources to promote wider adoption of digital assets. Coinbase went public through a direct listing on the Nasdaq in April 2021, marking a significant milestone in the cryptocurrency industry's integration with traditional financial markets.

Moreover, at this point it is also worth mentioning an additional extremely interesting fact. The U.S. federal government has initiated legal action against one of the most widely used cryptocurrency trading platforms.

On June 6 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, the second-largest cryptocurrency exchange based on volume, as reported by The SEC alleges that Coinbase conducted its cryptocurrency trading platform as an unregistered national securities exchange and broker.

The SEC also claims that at least 13 of the cryptocurrency assets offered by Coinbase to its customers, including tokens from Solana and Cardano, meet the criteria for being classified as "crypto asset securities," according to the complaint.

Furthermore, the SEC contends that Coinbase's staking program, described by the regulator as a means for crypto investors to "earn financial returns through Coinbase’s managerial efforts," is considered an investment contract and an unregistered security.

Virgin Galactic (NYSE: SPCE) – Space Tourism on the Rise

Virgin Galactic, often considered a prime example of a meme stock, has garnered significant attention from retail investors, driven by social media enthusiasm and speculative trading, showcasing the influence of online communities in shaping stock market trends and sentiment.

Virgin Galactic is a space tourism company founded by Sir Richard Branson in 2004. The company aims to provide suborbital spaceflights to tourists, allowing them to experience a few minutes of weightlessness and see the curvature of the Earth. Virgin Galactic uses a spaceplane called VSS Unity, which is launched from a carrier aircraft before igniting its rocket engine to reach the edge of space. While primarily known for its space tourism ambitions, Virgin Galactic also has plans to offer point-to-point space travel in the future.

Virgin Galactic: annual actual revenue, revenue estimates for current fiscal year, revenue estimates for next fiscal year, revenue estimates for 2 fiscal years ahead, annual actual CFO per share, CFO per share estimates for next fiscal year, CFO per share estimates for 2 fiscal years ahead, CFO per share estimates for current fiscal year,  screens from the Scrab tool.

The main mission of a company is to commercialize passenger service. While work on this project is still in its early stages, Virgin Galactic has generated significant interest and enthusiasm. The company aims to tap into the emerging market for space tourism, allowing adventurous individuals to fulfill their dream of reaching the edge of space.

Looking ahead, Virgin Galactic plans to commence test flights in mid-2025 of its new Delta spaceships and initiate regular flights for space tourists and researchers in 2026.

However, it is worth noting at this point that the flights are temporarily on hold - the company sold seats below cost. Their further development depends on whether they can pull the new vehicle project to completion, which may be difficult to do with further layoffs. In late 2023 company made its decision to terminate around 185 employees, accounting for approximately 18% of its workforce, as part of a cost-cutting initiative. Following this announcement, the company's shares surged by 14.1% in after-hours trading. The space enterprise anticipates an annual saving of $25 million as a result of this workforce reduction.

Polestar Automotive (NASDAQ: PSNY) – Electric Vehicle Contender Gaining Traction

Polestar Automotive has emerged as a leading competitor in the electric vehicle sector. Despite its recent market performance, Polestar continues to be a formidable contender in the electric vehicle industry.

Polestar Automotive:: annual actual revenue, revenue estimates for next fiscal year, revenue estimates for 2 fiscal years ahead, revenue estimates for current fiscal year,  PSNY consensus recommendation, screens from the Scrab tool.

With its historical roots in the racing industry and its growing popularity on social media platforms, Polestar has been categorized as a meme stock. However, its future seems promising. If the company successfully will continue to follow the chosen strategic path, there is potential for the stock to experience significant growth.

Meme Stock Trading: a Brief Summary

Meme stock status is still not clear to everyone - seasoned retail investors still treat these stocks more as a temporary trend than a chance to build a long term portfolio. In the case of meme stocks, you must remember that the stock price may rise instead of fall - but it can also happen in the opposite direction and you will lose, however. The stability of this type of investment is not certain: high returns are subject, as usual, to high risk.

While best meme stocks present a unique and modern approach to investing, they also come with their share of risks. To navigate this dynamic landscape, investors must equip themselves with the knowledge and strategies necessary to balance the potential rewards with the inherent risks.

By selecting the right meme stock, implementing effective trading strategies, and keeping an eye on the top meme stocks of 2024, investors can make the most of this modern investment trend.

In the paragraphs above we have selected for you promising meme stocks that are worth keeping an eye on while investing in the stock market. Take a look at the table with a summary and comparison:

Stock market metrics and meme stocks: brief summary from Scrab

Psst... as you can see from the above graphic, in Scrab you can customize many different stock data combinations for your needs. Thus, you get a tailor-made solution - which is rather unique on the market of stock market investing tools.

What's more, you also gain access to fundamental scoring - a functionality that turns data into good decisions. With us you don't have to rely on multi-column excel statements: you gain clear visualization, allowing you to take informed investment steps.

But if you still think that meme stocks are not something just for you - be sure to take a look at our blog post entitled "A Glimpse into the Future: Best Stocks for 2024 Investments", in which we talk about proven stock players :)

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