Retail Investors Drive Meme Stocks to 60% Gains Amid FOMO and Volatility

Retail investors are once again fueling a surge in meme stocks in 2025, with online communities rallying behind low-priced equities such as Opendoor Technologies (OPEN), Kohl’s (KSS), and American Eagle Outfitters (AEO). This renewed interest has driven significant volatility in the U.S. stock market, with an equal-weight basket of these meme stocks rising nearly 60% in a short span [1]. Unlike traditional investments grounded in fundamentals, these moves are largely driven by social media speculation and the fear of missing out (FOMO) [1].

Opendoor Technologies, once trading near $0.60, saw a nearly 900% surge at its peak, propelled by individual investors who labeled it a “meme stock.” The stock’s dramatic rise is emblematic of the broader retail-driven momentum that has doubled investor participation in U.S. stocks compared to pre-pandemic levels [1]. Similar dynamics are also emerging in the crypto space, where some analysts note that meme coins like LILPEPE are drawing speculative attention, with some forecasts suggesting a potential 10,000% increase in value post-listing. However, such projections remain unverified and speculative [10].

The renewed enthusiasm for meme stocks has raised concerns about tax implications, particularly for short-term capital gains. Historical examples such as the 2021 GameStop rally have shown how these fast-moving assets can lead to unexpected financial consequences. Experts warn investors to remain vigilant about tax liabilities and to account for them in their trading strategies [1]. Roundhill Investments highlighted the potential for rapid market shifts, noting that meme stock darlings can experience sharp price swings within days or even hours [1].

The surge also reflects a broader trend of increased risk appetite among both retail and institutional investors amid macroeconomic uncertainty. A recent PGIM survey found that over half of top institutional investors rank geopolitical risk as their primary concern, yet one-third still plan to increase exposure to higher-risk assets in 2025 [9]. This sentiment aligns with the meme stock phenomenon, which is largely driven by retail traders seeking to capitalize on short-term market moves [5].

While some meme stocks have delivered strong returns, others have faltered. For example, Krispy Kreme’s stock experienced a sharp decline after a brief period of hype, illustrating the volatile and speculative nature of these investments [7]. Meanwhile, broader small-cap growth funds have shown resilience, with the Vanguard Growth Index ETF (VUG) rising 3.75% in July 2025 and 11.06% year-to-date [3].

As the market continues to navigate a volatile environment, the influence of retail investors on meme stock movements remains a key trend. With tax implications and regulatory scrutiny potentially looming, investors are urged to approach these opportunities with caution and a clear understanding of the risks involved [1].