From GameStop to Dogecoin... Is the Era of 'Meme Investing' Coming? [Im Juhyung's Tech Talk]

Meme Stocks Started as Internet 'Memes'
GameStop, Dogecoin Show Presence in Financial Markets
Reflects New Generation's Search for 'Fun' in Investing
Concerns Over Excessive Volatility... US Treasury Also Watching
Secretary Yellen: "Will Discuss GameStop Incident"

The word 'stonk,' a deliberately misspelled version of the English word for stocks, 'stock,' is known as a neologism frequently used by meme stock investors. / Photo by YouTube capture

[Asia Economy Reporter Lim Juhyung] There is one common factor in recent events that drew attention due to skyrocketing stock prices, such as the US video game retailer 'GameStop' and the sudden surge in value of 'Dogecoin' that sparked controversy. That is the popularity gained as 'memes' on social networking services (SNS) and internet communities.

A meme is a newly coined term referring to images, texts, videos, etc., shared on internet communities and SNS. While it was once regarded as a cultural phenomenon of the digital age, it is now pointed out that memes have gained tremendous influence, enough to impact financial markets.

◆GameStop Incident Started in a US Internet Community Subgroup

The GameStop stock price surge incident began last month on the US internet community 'Reddit.' Reddit is a community where various netizens gather to exchange opinions on specific topics, and at that time, a subgroup called 'WallStreetBets,' used by individual investors, had been established within this community.

Video distribution chain GameStop located near Union Square in the Manhattan area of New York City, USA. / Photo by Yonhap News

One day, a proposal arose in this subgroup to buy GameStop shares, which were priced at only $5 per share (about 5,500 KRW), and subsequently, about 4 million netizens belonging to this subgroup bought GameStop shares, causing the stock price to skyrocket. This incident became known as the 'GameStop incident' and became a major topic in the US.

At that time, a netizen named 'Roaring Kitty' (real name Keith Gill), who advocated buying GameStop shares on WallStreetBets, said in an interview with the US financial media 'Wall Street Journal (WSJ)' on the 29th of last month (local time), "I did not expect things to escalate this much," but also stated, "I will continue to share my investment know-how with retail investors."

◆Dogecoin Soared Following CEO Musk's 'Tweet'

Meanwhile, on the 9th, the value of Dogecoin, a type of cryptocurrency, suddenly surged, attracting attention. According to the cryptocurrency trading site 'CoinMarketCap,' the 24-hour trading volume of Dogecoin from that day until 10:20 AM on the 10th reached a staggering $16.9 billion (about 18.7792 trillion KRW).

Tesla CEO Elon Musk indirectly mentioned Dogecoin on the 4th (local time) through 'Twitter'. / Photo by Twitter

The Dogecoin surge was triggered by social media posts from Elon Musk, CEO of Tesla. He indirectly referenced Dogecoin by posting on Twitter images combining Dogecoin with Simba, the main character of the animation 'The Lion King,' and by changing parts of song lyrics to 'doge.' Individual investors who interpreted this as advice to buy Dogecoin joined the buying spree.

◆Internet Culture 'Memes' Also Influence Financial Markets

The commonality in the surges of GameStop and Dogecoin is that users active on internet communities and SNS were at the center. Especially, these incidents became popular as 'memes' among US netizens.

Reddit, which hosts the WallStreetBets subgroup, is an internet community where meme culture is well developed. Also, Dogecoin originally emerged from a meme-based cryptocurrency. The term 'doge' comes from the 'shibe doge' image frequently used by US netizens.

The 'Dogecoin' mentioned by CEO Musk, which became a hot topic, was inspired by the 'Shiba Doge' meme popular among English-speaking internet users. / Photo by Reddit, an online community

As a result, it is analyzed that the 'meme culture' familiar to the younger generation, who are accustomed to the internet and SNS, has even influenced financial investment.

In fact, US financial media such as Bloomberg, WSJ, and Forbes have nicknamed investment products popular in internet communities, like GameStop and Dogecoin, as 'meme stocks.'

Earlier, Bloomberg published an article titled 'How Reddit's GameStop Disrupted the Market' last month, describing meme stock investors as "a new generation investing from home through application (app) platforms," and explained, "They find fun in investing and are dedicated, but some worry that they are 'gamifying' the market."

Meme stocks share characteristics similar to internet memes. They start as playful exchanges of opinions but suddenly attract a large number of individual investors who buy and sell, causing extreme stock price volatility. This is similar to how videos and images that gain attention in internet communities become popular and then fade away.

◆Meme Stock Volatility Could Cause Unexpected Situations

Therefore, some express concerns that meme stocks could damage financial markets. The uncertainty relying on the unique 'popularity' of meme stocks may increase market volatility and cause unforeseen incidents.

In fact, the US Treasury plans to increase monitoring of financial market volatility triggered by meme stocks such as GameStop.

According to local media including The Washington Post, US Treasury Secretary Janet Yellen requested a meeting earlier this month with senior officials responsible for financial policy to discuss the volatility arising from GameStop stock trading.

In an official statement, the Treasury explained, "Secretary Yellen considers market stability important," and "We will discuss whether the recent market volatility aligns with investor protection and a fair market."