The Meme Stock Frenzy: Origins and Implications

33 Pages Posted: 1 May 2023 Last revised: 3 May 2023

See all articles by Dhruv Aggarwal

Dhruv Aggarwal

Yale University, School of Management

Albert H. Choi

University of Michigan Law School; European Corporate Governance Institute (ECGI)

Yoon-Ho Alex Lee

Northwestern Pritzker School of Law

Date Written: April 28, 2023


In 2021, several publicly traded companies, such as GameStop and AMC, became “meme stocks,” experiencing a sharp rise in their stock prices through a dramatic influx of retail investors into their shareholder base. Analyses of the meme stock surge and its implications for corporate governance have focused on the idiosyncratic creation of online communities around particular stocks during the COVID-19 pandemic. In this Article, we argue that the emergence of meme stocks is part of longer-running digital transformations in trading, investing, and governance. On the trading front, the sudden abolition of commissions by major online brokerages in 2019 reduced entry costs for retail investors. Zero-commission trading represents a modification of the payment for order flow (PFOF) system, which is itself a product of technological disruptions in the financial markets in the 1980s. With respect to investing, the emergence of social media communication amplified retail investors’ pre-existing dependence on social networks to make decisions regarding stock market entry and portfolio construction. It also allowed them to coordinate their investing activities and affect the market price while expressing their non-financial interests. Finally, while some startups have attempted to bring the shareholder experience into the digital age and help retail investors participate in governance, these developments have been relatively modest. After tracing the meme stock phenomenon, we sketch a research agenda for law and finance scholars to explore the concrete effects of meme investing on corporate governance outcomes. First, we ask whether retail traders can transform into enthusiastic retail shareholders engaged in corporate governance. Second, we propose a broader metric for “meme-ness”: future scholarship can use modern advances in data science to better identify which companies are vulnerable to meme surges and social media-driven investing unrelated to their financial fundamentals.

Keywords: meme stock; meme surge; zero-commission trading; GameStop; AMC Entertainment; Bed Bath & Beyond; Robinhood; retail investor; corporate governance; short squeeze; predatory trades; shareholder vote; 14a-8

JEL Classification: G, G12, G14, G3, K, K22

Suggested Citation

Aggarwal, Dhruv and Choi, Albert H. and Lee, Yoon-Ho Alex, The Meme Stock Frenzy: Origins and Implications (April 28, 2023). Southern California Law Review, Vol. 96, 2023, U of Michigan Law & Econ Research Paper No. 23-010, Northwestern Law & Econ Research Paper, No. 2023-08, Northwestern Public Law Research Paper, No. 2023-26, Available at SSRN:

Dhruv Aggarwal

Yale University, School of Management ( email )

New Haven, CT
United States

Albert H. Choi

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States


European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels


Yoon-Ho Alex Lee (Contact Author)

Northwestern Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
(312) 503-2565 (Phone)

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