As a general rule of thumb, investors should stay away from meme stocks to avoid. Once a company becomes genuinely classified as a meme stock, an entire community of online traders can leverage communication and aggregate resources to manipulate a stock’s value. Sometimes, it can be as simple as posting a meme about leaning forward when you take gaming more seriously, like in the case of the famed “Roaring Kitty.”
However, the presence of meme stocks is likely emblematic of a deeper problem in American society today, which is that owning assets has never been easier.
More and more, the desperation of the economic conditions young people are facing has led to the dream of getting rich quickly, which has compounded the popularity of meme stocks. Unfortunately, unless you’re in on the moves before they hit the market, you’re likely to lose money chasing the meme stock dream.
BlackBerry (BB)
I don’t think I’ve seen a BlackBerry (NYSE:BB) in person since 2009. Somewhere along the way, after its prospects as a smartphone company cratered, BB became a cybersecurity and software provider. However, the company consistently bleeds money and has little to show for the cyclical spikes it has experienced as a result of meme stock trading.
Over the last two decades, the company has lost nearly all of the gains it produced and has become a shell of its former self. Now, due to its low stock price, the company represents a prime target for meme stock investors who want to get in on a low price and create artificial volatility.
As such, BB is among meme stocks to avoid at all costs, as it is likely a target for a series of short squeezes. That being said, such crowd-funded investing plays can be easy to rally behind due to BB’s position in cybersecurity, which could legitimately help it find new footing in the future, though it’s not likely.
Robinhood (HOOD)
Despite its name, Robinhood (NASDAQ:HOOD) does little to facilitate the transfer of wealth from the rich to the poor. On the contrary, the company consistently meddles in the trading of meme stocks by disabling the buy button or canceling trades overnight. Moreover, despite being the people’s option for trading stocks, Robinhood rarely offers the kind of high-speed trading opportunities that the online traders of Reddit (NASDAQ:RDDT) take advantage of.
As a result, the company’s stock is a meme itself and attracts the ire of both its customers and regulators as it navigates a post-short-squeeze-dominated market. Thus, cautious investors should not fall for any of the drama surrounding HOOD stock. That’s because the emotional and excitement-filled momentum surrounding the meme stock movement could lead to a significant drop in value for Robinhood should shenanigans ensue.
Nokia (NOKBF)
Once a dominant force in the cellphone industry, Nokia (OTCMKTS:NOKBF) has transitioned into a telecom and information technology company over the last decade. What’s even more confusing is that before a short squeeze caused its stock value to spike and plummet, the company seemed to have successfully settled into its new niche. Right as it began regaining credibility, however, it received a new classification as a meme stock.
Now, Nokia is a tricky investment proposition, because on one hand, it has started to rebuild itself, but on the other, those successes are undermined by its low share value and easily manipulated market dynamics.
As such, buying into Nokia now could offer two different types of capital generation opportunities. The first would be from an unlikely but possible steady growth. The second would be from an even more unlikely and less possible spike as a result of a short-squeeze play for the online investing community.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.