When Trump Media & Technology Group, which owns Truth Social, went public this week, many were quick to declare the company a “meme” stock. That’s because despite a nearly $8 billion valuation, the company’s main product—Truth Social—is reportedly in deep water. The social media company, which former president Donald Trump owns, has been operating at steep losses since its start in February 2022. What is a meme stock? Northeastern experts say the concept is relatively recent, and can be traced to a bubbling, public discontent with the financial system—at the investors and power brokers on Wall Street who drive the economy and whose big bets have occasionally plunged the U.S. into recession.
In fact, that’s how GameStop became arguably the first meme stock in January 2021, says Nikos Passas, professor of criminology and criminal justice at Northeastern University, an expert on financial fraud. After a handful of Wall Street hedge funds tried to “short” GameStop stock, a small community on social media platform Reddit rallied to save the failing company by trading the stock higher and higher, sending its stock price north of $1,700 at one point before it all came crashing down. “Meme stocks are shares of publicly traded companies that owe their popularity to social media and online activity,” Passas says. “GameStop is considered to be the first such stock.”
