Meme Stock Fever Returns: New Surge Driven by Social Media
In early July 2025, "meme stocks," which once became a social phenomenon, began to attract attention again. Excitement among individual investors is visible on social media and online forums, and rapid price movements are occurring in some stocks. Based on an interview with John Marshall of the Goldman Sachs Research division, this article organizes what meme stocks are, why the frenzy is happening again, and what the implications are for the market as a whole.
1. The Return of Meme Stock Fever
1-1. Comparison with 2021
Movements reminiscent of the meme stock boom of GameStop and AMC that occurred in early 2021 have re-emerged over the past few weeks.
John points out that "in terms of quantitative measurement based on trading volume, this wave is about half the scale of the 2021 frenzy," and explains that similar small-scale waves are observed periodically every six months.
"This type of movement is usually measured in terms of weeks" (John Marshall).
1-2. Recent Surge Circumstances
The stocks that have surged in the last few days include a diverse lineup, including emerging themes such as crypto-related, AI-related, and retail chains.
These are defined as meeting the typical conditions of meme stocks: "attracting attention on the internet and being traded intensively by small-lot investors."
2. Definition and How to Identify Meme Stocks
2-1. What are Meme Stocks?
Definition: Stocks that become a topic on the internet (social media, forums, etc.) and see a rapid increase in small-lot investors.
They have the characteristic of being easy to anticipate trends by monitoring actual trading volume, not just buzz.
"It is effective to track trading volume, not chat or post volume" (John Marshall).
2-2. Quantitative Approach
Track the rapid increase trend in both trading volume (number of shares) and option trading volume.
Evaluate this with a "2-week moving average," and if activity has increased for two consecutive weeks, it is predicted that there is a high possibility it will continue the following week.
3. Strategies of Small-lot (Retail) Investors
3-1. The Sophistication of Buying Call Options
Many retail investors aim for risk preference by leveraging through call options rather than buying stocks directly.
"As stock prices rise, option deltas increase, causing positions to expand in a self-reinforcing manner" (John Marshall).
This allows for significant gains from small amounts of capital, while limiting premium losses during downturns.
3-2. High Risk Tolerance
Meme stock hunting is a strategy of "estimating high upside potential and betting big with small amounts."
Against the backdrop of social media buzz, trading aimed at short-term profit generation is prominent.
4. Institutional Response
4-1. Impact of Short Covering
While it starts with retail buying, short covering by institutional investors holding short positions accelerates the rise as a secondary effect.
"Unwinding short positions fuels further gains and drives up volatility" (Allison Nathan).
4-2. Hedge Fund Preparedness
Learning from the chaos of 2021, an increasing number of hedge funds are monitoring volume trends in real-time.
They keep a constantly updated list of promising stocks (usually 30 to 50) and have systems in place to respond quickly to big moves.
5. Future Outlook and Implications
5-1. Duration
Quantitative models evaluate this as a short-term movement on a "multi-week" basis.
As of July 24, 2025, the view is that the peak has not yet been reached, and continued activity is expected for the time being.
5-2. Impact on the Overall Market
Although meme stocks themselves do not significantly affect the total market capitalization, they are significant as a leading indicator of risk-on sentiment.
"It is a positive sign in a broad sense that individual investors are taking risks on future growth themes."
5-3. Points to Note
Excessive overheating also functions as a "warning signal."
There is always a possibility that headwinds from external news (such as political or regulatory developments) may suddenly arise, making a swift stop-loss strategy essential for short-term traders.
In this article, we explained the mechanism behind the resurgence of meme stocks from the perspectives of quantitative models and options trading. The cycle where social media-driven movements trigger sharp stock price spikes, further accelerated by institutional investor short covering, is highly likely to recur, and investors must carefully consider the timing to catch the wave and their exit strategies.
