On the Efficiency of Meme Stocks

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.