Meme Stocks and Herd Behavior

Abstract

Equity market seems to go viral. The recent epic surge in AMC stock price just three-month following the GameStop short squeeze episode might indicate that meme stocks are unlikely to be an epiphenomenon. This letter explores the investment behavior of meme stock traders, particularly concerning their tendency to exhibit herd behavior. We define the meme stock market as an equally weighted index of stocks whose purchase the Robinhood app restricted during the GameStop short squeeze episode. Over the last two years, using hourly data, we provide robust evidence that herding in meme stocks occurs beyond the brief short squeeze episodes.