Dave Mazza, managing director and head of product at Roundhill Investments, discussed the evolving landscape of meme stocks between 2021 to 2025 and how the influence of retail investors will define the segment this year.
Meme Stocks Shift As Retail Power Grows
Mazza, during an interview with the Schwab Network on Tuesday, highlighted that the meme stocks, which initially represented Main Street’s struggle against Wall Street, to focus on stocks with high short interest and heavy hedge fund ownership, such as GameStop Corp. (NYSE:GME) and AMC Entertainment Holdings Inc. (NYSE:AMC).
He noted that in 2025, meme stocks have shifted to more speculative areas of the market, including nuclear, clean energy, and crypto-related stocks. Despite this shift, retail investors continue to influence the market, as seen in the resurgence of meme stocks like OpenDoor (NASDAQ:OPEN) and Krispy Kreme (NYSE:DNUT).
Over the past year, OpenDoor stock soared 330.43%, while Krispy Kreme declined 54.33%.
Mazza also emphasized that retail investors, who accounted for 8-10% of U.S. equity market volume before the pandemic, surged to 20-25% in 2025, and even reached 35% at times. He cautioned institutional investors against disregarding retail investor behavior because they are now more informed and educated, with a broader range of trading options.
As for the future of meme stocks, Mazza suggested that the high valuations of hyper-growth stocks are justified by their strong revenue and earnings growth. He urged investors to remain cautious without writing off these valuations entirely, noting that emerging areas such as nuclear energy and quantum computing could fuel the next wave of meme stocks in 2026.
Tesla, A Meme Stock?
When asked about the distinction between the overvalued Tesla (NASDAQ:TSLA) stock and other meme stocks, Mazza pointed out that Tesla’s valuation is based on its future potential, particularly its ventures into humanoid robotics and robotaxis. He noted that Tesla has a loyal retail and institutional investor base, which believes in the company’s transformative potential.
Interestingly, Yale School of Management Senior Associate Dean Jeff Sonnenfeld had called Tesla the “biggest meme stock” ever. He criticized Tesla’s valuation, noting its price-to-earnings ratio exceeds 200 and arguing investors place too much faith in Elon Musk. He also called the board’s new compensation plan for Musk foolish and reckless, warning it could ultimately hurt shareholders.
Meme Stocks Thrive On Hype, Not Fundamentals
Meme stock culture reflects retail investors uniting around shared narratives rather than fundamentals, using online communities to collectively challenge traditional Wall Street thinking.
These stocks are highly volatile shares that can spike and crash rapidly, driven largely by retail traders, viral social media trends, and influencer hype. The phenomenon gained prominence in January 2021, when Reddit’s WallStreetBets coordinated buying of heavily shorted GameStop shares, triggering a massive short squeeze that sent the stock up more than 2,300%.
2025 was the year when meme stocks came back to the limelight. Besides KrispyKreme and OpenDoor, other meme stocks were Beyond Meat Inc. (NASDAQ:BYND), which slumped over 75% and Kohl’s Corp. (NYSE:KSS), which gained 60%.
Experts Warn Against Meme Stock Frenzy
However, CNBC commentator Jim Cramer is not a fan of meme stock investment and advises against it. In October, he called meme stock growth “short-term Victories” and warned that picking them in hopes of financial stability is an “easy road to disaster.”
Echoing the same sentiment, billionaire investor Ray Dalio cautioned that investors often chase meme stock trends that eventually fade, while overlooking valuation. He emphasized that ignoring market pricing, whether a stock is cheap or expensive, can lead to costly investment mistakes.
Price Action: Over the past three months, the Roundhill Meme Stock ETF (NYSE:MEME) declined 24.64%, as per Benzinga Pro. It climbed 3.93% on Tuesday to close at $7.40. In October, the fund made a comeback after a hiatus of two years.
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