Rise of Meme Stocks: How Gen Z Investors Influence Market Volatility
Abstract
The 2021 surge of "meme stocks" such as GameStop and AMC show how social media platforms, particularly Reddit and Tiktok, could mobilize a new generation of investors and disrupt traditional market dynamics. This study explores the influence of Generation Z investors on meme stock volatility. It combines a case study of GameStop and AMC trading activity with a survey of high school and early college investors. Price and volume data were compared with social media discussion trends. It was revealed that there is a strong positive correlation between social media activity and heightened market volatility. Survey responses further show that behavioral finance patterns like: fear of missing out (FOMO), herd mentality, and the hope to win big, all help drive Gen Z traders to make these trading decisions. This suggests that Gen Z investors, when fueled by online communities and emotions, represent a disruptive force in financial markets. Their behavior starts to make the division between investing and social movements unclear. As Gen Z's financial power continues to expand their influence on market volatility will continue to grow.