On the Efficiency of Meme Stocks

8 Pages Posted: 17 May 2021 Last revised: 12 Jul 2021

See all articles by Arash Aloosh

Arash Aloosh

Neoma Business School

Hyung-Eun Choi

NEOMA Business School

Samuel Ouzan

Neoma Business School

Date Written: July 7, 2021

Abstract

Meme stocks have received a lot of attention in the media from both investors and regulators in recent months. The power of the crowd, coupled with the unprecedented coordination of social media investors, raises questions about their impact on information efficiency. We construct two meme stock indices based on stocks whose purchase the Robinhood app restricted during the GameStop episode. We provide evidence of meme stock market efficiency. Our results indicate, perhaps contrary to some early speculation, that since early 2020, this new influx of highly connected retail investors improves market efficiency.

Keywords: Market Efficiency; Meme Stocks; Random Walk; Social Trading

JEL Classification: G14; G12; G41

Suggested Citation

Aloosh, Arash and Choi, Hyung-Eun and Ouzan, Samuel, On the Efficiency of Meme Stocks (July 7, 2021). Available at SSRN: https://ssrn.com/abstract=3839832 or http://dx.doi.org/10.2139/ssrn.3839832

Arash Aloosh

Neoma Business School ( email )

1 Rue du Maréchal Juin,
Mont Saint Aignan, 76130
France
+33232824736 (Phone)

Hyung-Eun Choi

NEOMA Business School ( email )

1 Rue du Maréchal Juin
Mont Saint Aignan Cedex, 76825
France

Samuel Ouzan (Contact Author)

Neoma Business School ( email )

1 Rue du Maréchal Juin
Mont Saint Aignan Cedex, 76825
France

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