In recent years, meme stocks have captured headlines and ignited debate among investors and legal professionals alike. One of the most dramatic examples unfolded in late October 2025, when Beyond Meat, a well-known producer of plant-based meat alternatives, experienced a rapid surge and crash driven by social media fervor, retail investing and high-profile shorting activity. This article explores how meme stocks differ from traditional investments, why Beyond Meat became a meme stock and the complex challenges these episodes pose for investors and markets.
I Know What a Meme is, But What Is a Meme Stock?
While a meme is widely understood as a viral joke or idea on the internet, a “meme stock” is a publicly traded company whose share price moves intensely and unpredictably, driven more by online hype, social media coordination and viral content than by traditional business fundamentals. Trading driven by communities on platforms like Reddit, Twitter and Stocktwits can create price volatility detached from earnings or other traditional growth metrics.
For Meme Stocks, What Goes Up Must Come Down
After peaking at $3.62 on October 21, 2025, propelled by viral social media support and heavy retail buying, Beyond Meat shares rapidly collapsed below $1 following the company’s weak earnings release. What started as a dramatic price surge in Beyond Meat’s shares quickly exposed the risks of meme-stock investing, as heightened speculation and rapid trading led to severe volatility and a sharp disconnect from the company’s actual business results.
GameStop: The First Meme Stock
GameStop is generally considered the first meme stock. In January 2021, retail investors organized largely through Reddit’s r/WallStreetBets and instigated by Roaring Kitty (aka Keith Gill) drove a historic short squeeze, a spike in GameStop’s share price driven by traders who had bet against the stock rushing to buy it back. The rally was powered not only by coordinated buying but also by internet culture, memes like “diamond hands” and slogans like “to the moon” captured imaginations and motivated buying. Though the stock soared to $81.25 at its peak, it later fell sharply, dropping to as low as $40.59 by February 19, 2021, and remained volatile above those levels for months; a cautionary example of meme stock volatility.
Several other companies, including AMC, BlackBerry, Bed Bath & Beyond and Nokia, have similarly been swept up in meme stock waves with fluctuating and generally unsustainable price spikes.
How Beyond Meat Became a Meme Stock
Beyond Meat quickly became a meme stock in October 2025 amid rapid price swings, intense short selling and viral retail excitement.
- Short Interest: Hedge funds and institutional investors heavily shorted Beyond Meat because of its declining sales and losses. At one point, more shares were borrowed and sold short than actually existed for trading, a risky setup known as extreme short interest.
In practice, this meant the same shares were lent and re‑lent down a chain of traders, so if the price started rising and everyone who had bet against the stock tried to buy back at once, there might not be enough shares available without driving the price sharply higher. - Social Media Buzz: Reddit’s r/WallStreetBets, Stocktwits and other online platforms amplified attention, encouraging coordinated buying (“Let’s squeeze the shorts!”).
- ETF Inclusion: Addition to the Roundhill Meme Stock ETF, an investment fund tracking retail favorites, added credibility and momentum.
- A Walmart Partnership: News about expanded distribution gave the rally another brief push.
- Martin Shkreli’s Involvement: The controversial “pharma bro” joined other traders betting against Beyond Meat just as the price soared, becoming a lightning rod for retail traders eager to “squeeze” his short bet as a form of symbolic revenge against Wall Street predators.
How Short Selling Works
Short selling is a high-risk trading tactic where investors borrow stock expecting its price to fall. They sell the shares immediately and aim to buy them back later at a lower price, returning the shares and pocketing the difference. However, if the stock price rises, short sellers must purchase shares at higher prices, risking potentially unlimited losses. This tactic, central to Beyond Meat ’s meme stock event, can amplify price swings if many shorts cover positions simultaneously during a rally.
Short Squeeze and Price Volatility Explained
Between October 16 and 21, Beyond Meat’s share price rose from approximately $0.52 to $3.62, a gain exceeding 600% in a matter of days, and it briefly spiked as high as $7.69 intraday on October 22, nearly a 1,400% jump from its lows. Retail buyers, often motivated by group psychology, memes and hopes of “beating Wall Street,” drove the surge. As the stock climbed, traders who had bet against Beyond Meat were forced to buy shares back to limit their losses, and that extra demand on top of the retail buying drove the price up even faster; a classic short squeeze. Many of the retail investors buying into the spike were not relying on detailed financial analysis, but on momentum and online sentiment, while more experienced traders with risk controls in place (such as preset exit points for losing trades and caps on how much they could lose in a single day) were sometimes able to ride out the volatility and take profits once the price moved back toward the company’s weak fundamentals.
Why the Price Crashed
Despite the surge, Beyond Meat’s stock soon fell sharply. The excitement driving the rally was largely disconnected from any improvement in revenue, profitability or demand.
The immediate catalyst for the crash was the company’s third-quarter 2025 earnings release, which revealed deeper problems:
- As Barron’s summarized: Beyond Meat posted a quarterly loss of $110.7 million in its third quarter, over four times worse than its $26.6 million loss from the prior year
, while revenue fell 13% year-over-year, missing expectations and highlighting a persistent drop in demand for plant-based products. - The company confirmed negative operating margins and announced further restructuring, including a debt‑for‑equity swap that would issue new shares and dilute existing shareholders, eroding the stock’s value when the value of the company gets split among more shares, making each share less valuable.
- When reality returned, many retail investors who bought during the meme-driven rally suffered steep losses. The sharp drop made clear that, absent fundamental strength or profitability, even the wildest social media hype could not sustain long-term investor optimism.
Chart: Beyond Meat’s Meme Rally and Collapse
Lessons for Professionals: What Went Wrong, and Why?
- Disconnected from Fundamentals: The stock’s moves reflected hype and emotion, not business strength. Being “in the know” was less about financial analysis and more about following internet trends.
- High Risk of Loss: Those who rushed to buy during viral surges often lost money as reality set in.
- Short Sellers’ Strategy: Hedge funds shorting Beyond Meat sometimes incurred substantial losses if they repurchased shares at elevated prices during the meme-driven spike. However, those with contracts and resources sufficient to maintain their short positions beyond the period of extreme volatility were sometimes able to profit as the share price ultimately normalized and reflected the company’s fundamentals.
Conclusion
Beyond Meat and the meme stock phenomenon offer important lessons for anyone navigating today’s markets: viral excitement can temporarily override rational investing, but prices eventually tend to move back toward the reality of a company’s underlying business.
Contact
To discuss further, contact KJK Corporate & Securities attorneys Christopher Hubbert (CJH@kjk.com) and Cynthia Saad (CS@kjk.com).