Amid this week’s speculative euphoria, we asked ChatGPT what makes a meme stock.
The chatbot laid out four things for investors to focus on.
The AI also had some ideas about what stocks might be next in line for a short squeeze.
What makes a meme stock? ChatGPT has a couple of ideas.
When shares of Opendoor Technologies, a little-known online real estate platform, unexpectedly started surging this month, a few other seemingly random names followed. The list of stocks included Krispy Kreme, Kohl’s, and GoPro, disparate companies united only by their financial challenges and vaguely retro vibes.
On the surface, meme stocks that go parabolic have little in common, but if you look under the hood, there are some similarities in their profiles.
How to find the next meme stock? We asked ChatGPT
Since the GameStop short squeeze of 2021, investors have been trying to spot the next meme stock before it starts its ascent to the moon.
After seeing some investors bragging on Wall Street Bets about getting winning trading advice from ChatGPT, we decided to test the AI’s knowledge of the market’s speculative frenzy.
(We will preface all of this by saying it’s not real investment advice. ChatGPT is scouring the internet—including Wall Street Bets! — for wisdom on the subject.)
The prompt was: “What’s the best way to identify what could be the next meme stock?”
After clarifying what a meme stock is, the chatbot responded that identifying one is “more of an art than a science.”
It then proceeded to lay out some more detailed criteria for investors to think about:
High short interest (>20% float), Days-to-cover ≥5
The bot suggested Kohl’s, Opendoor, and GoPro as examples of stocks with high interest from short sellers, naming Fintel.io and ShortInterestTracker as tools for assessment.Surge in social mentions (Reddit/Twitter)
It highlighted the importance of noting sudden increases in a sock’s mentions or upvotes on social media platforms such as X, Reddit and Discord, citing platforms including ApeWisdom and AltIndex.Unusual options activity (OI spikes)
While discussing unusual options activity, it stated that “retail traders often pile into out-of-the-money (OTM) call options, creating gamma squeezes as market makers hedge by buying shares-fueling price surges.”Meme narrative (pop‑culture, underdog story)
ChatGPT highlighted the importance of a narrative, citing the David vs. Goliath mentality that drove the GameStop short squeeze or companies with products popular with retail investors, such as Krispy Kreme or AMC Entertainment, a fellow struggling meme stock.Wanting to test the AI’s predictive abilities, we asked:
“Based on this criteria, can you predict the next meme stock?”
ChatGPT quickly named American Eagle Outfitters as its pick for the next meme stock based on its criteria, providing reasons it checks all four boxes. Per the bot:
Social Media Momentum
Its recent ad campaign starring Sydney Sweeney has ignited buzz across Reddit, X, and Stocktwits, pushing the stock up ~10% on the news.Short Interest & Squeeze Potential
With ~13% of its float shorted, there’s room for a squeeze if sentiment continues to climb.Options Flow
Early reports suggest call option volume has ticked upward around recent campaign news.Narrative + Meme-Worthiness
The Sydney Sweeney campaign taps into pop-culture, star power, and a viral storyline — all classic ingredients for meme stock fervor.”Indeed, the fashion retailer’s new ad campaign featuring Sweeney has made American Eagle a top trending stock across retail trading forums. While the stock is only up 11% for the week, the assessment shows that ChatGPT can spot trends as they’re unfolding.
Though it wasn’t asked to, the chatbot added honorable mentions to what could be the next meme stock, including Krispy Kreme, GoPro, and Rocket Lab USA.
It should be noted that these aren’t great picks by the bot, as all of these stocks were already fading after surging earlier in the week.
Meanwhile, RocketLab, though it has fairly high short interest, is not actually a meme stock. It is possible that ChatGPT confused it with Rocket Companies, which has much higher short interest and was among the meme shares to surge this week.
Read the original article on Business Insider
