The US government set out to support consumers and jolt the economy when it issued federal stimulus checks during the early months of the COVID-19 pandemic. But actually, that money helped propel questionable investments in “meme stocks,” one of the most visible oddities of the period’s market boom.
Retail investors—who buy shares directly through websites like Robinhood rather than investment firms or employer-sponsored plans—snapped up stocks that appeared to have poorer prospects under traditional metrics. Remember the online frenzy over GameStop and AMC Entertainment? Their stock prices jumped after the first two stimulus payments hit in April 2020 and January 2021, driven by retail investor buying, says research by Harvard Business School Professor Robin Greenwood.
Read more at HBS Working Knowledge.