How Memes Became a Market Coordination Tool

Meme Investing Was Not Just a Retail Trading Fad

When it became a large-scale phenomenon, “meme investing” was derided by seasoned investors as a bubble-like effect created by unsophisticated retail investors that would ultimately lose their money. And to some extent, the critics seemed valid: Meme investing cared little for fundamental value, it was driven by retail investors, was mostly a reflective phenomenon, and it could create brutal volatility spikes.

But a new study argues that meme-investing communities are not merely speculative online crowds, but a form of outsider financial innovation.

By combining social media platforms, shared anti-establishment identity, meme-based coordination, and distributed learning, retail investors have developed new ways to participate in markets and occasionally disrupt them.

This disrupts the traditional banks-and-funds-driven model, in close coordination with financial regulators, giving back some level of power to “the little guys”. And put interesting questions about regulation, speculative activity, and the future of financial markets in the information age.

This study was made by Lennart Ante, a researcher at the Constructor University, Blockchain Research Lab in Germany, and published in Technology In Society¹, under the title “Outsider innovation in digital investor communities: How meme coordination reshapes market participation”.

What the Study Examined

The study examined how digitally networked communities can coordinate to act in financial markets, for example, through the Reddit forum r/wallstreetbets.

The study focused on how decentralized, digitally-mediated communities innovate in a field as tightly regulated and institutionally dominated as finance.

“Meme investing communities have not created new financial instruments, but they have introduced processes that did not previously exist in this form in financial markets, including crowdsourced due diligence, Schelling-point coordination via memes, and radical transparency rituals (“loss porn”).”

The data were collected primarily from the subreddits r/wallstreetbets and r/dogecoin over the period January 2021 to March 2024, yielding a total of 33,700 comments.

In addition, the researcher also conducted semi-structured interviews with active members of these communities, for a total of  41 interview transcripts, each ranging from 15 to 36 minutes.

Outsider Finance: Retail Investors Against Wall Street

In early 2021, Wallstreetbets drove a sharp rise in the price of GameStop and other “meme stocks” through viral, bottom-up investor coordination.

Instead of traditional market signals and analysis, the participants rally around shared memes, narratives, and objectives, combining internet humor with serious stock analysis to collectively influence market outcomes.

The study focuses on the concept of “outsider finance” to describe the innovative financial behaviors and strategies emerging from digitally networked, non-institutional actors, particularly online communities of retail investors, in contrast to traditional finance actors’ behaviors (insiders).

“In meme investing communities, this identity frequently takes the form of an oppositional subculture, with members adopting labels like “apes” or “degenerates” that simultaneously foster solidarity and distinguish them from institutional actors.”

This perception of being “against Wall Street” was very much part of the self-perception of Wallstreetbets participants, in the context of a generation that were children or came of age in the 2008 financial crisis.

Source: Technology in Society

How Memes Became Coordination Signals

Using Meme And Forums To Coordinate

A key idea is that outsiders’ ignorance of dominant paradigms enables them to approach problems from novel angles.

This helped them create several innovative concepts:

• Meme-based stock promotions.
• Crowdsourced due diligence.
• Coordinated trading campaigns.

“Once something gains traction, the whole community sees it instantly—visibility makes collective action possible”

Ironically, this sort of coordination and “market manipulation” would be completely illegal if done by powerful, institutional actors. So even if they sometimes do it, they are severely constrained by the regulatory framework in doing such a practice. Which could give groups of “degenerate” retail investors a real advantage.

Source: Technology in Society

Distributed Learning and Crowdsourced Due Diligence

A key part of what makes these communities unique compared to other social media is that they enhance the potential for collective, distributed learning.

“Reddit kind of becomes your memory. If you saw a good DD [due diligence] post three months ago, you just search and it’s there. It’s like a permanent classroom.”

This means that even relatively unsophisticated investors can benefit from the “wisdom of the crowd”, with the more educated or experienced investors and traders among the participants sharing their expertise freely.

Even failures are shared; users routinely share spreadsheets, technical analysis, and screenshots of trading losses, known as “loss porn,” as teaching moments.

In turn, this brings to the investors non-monetary rewards like social validation, community reputation, and feedback & constructive criticisms.

“Reddit lets you toss out a wild idea, and if people like it, suddenly 50,000 apes are reading it. That doesn’t happen on Bloomberg.”

And the format of this distributed learning and memetic diffusion matters, especially for Internet natives. Interviewees described the following meme signals more instinctively than technical analysis, noting that “memes travel faster than candlesticks”.

Reddit and Discord as Investor Infrastructure

Reddit’s threaded discussions, upvote system, and archiving functions allowed ideas and analyses to circulate long after posting, making it easier for users to revisit and refine arguments.

Furthermore, other more focused communities were formed on Discord, a platform initially conceived for video games, making it a perfect overlap for digital native active in Wallstreetbets.

This created a nesting doll network of a wider community with thousands, or even hundreds of thousands of participants and viewers, with a more specialized and invite-only group for more coordinated market actions and creation of memes.

These environments also created feedback loops where social validation (via upvotes or replies) amplified certain narratives, allowing popular ideas, whether analytical or humorous, to dominate discourse and even shape trading behavior.

In that respect, this made Reddit and Discord financial infrastructure on par with the Bloomberg terminal and their integrated newsfeed, but for a new generation of retail investors.

The Market Risk: Volatility, Herding, and Manipulation Gray Zones

Coordinated market manipulation would be generally considered a bad thing, and even a criminal offense when done by powerful financial institutions like banks or large investment funds.

And while communities like Wallstreetbets might see it differently, the same activities by retail investors can be an issue as well.

Nowhere was this more visible than in the crypto market, especially for so-called “meme coins”.

“ Financial influencers (e.g., Elon Musk) amplified this effect, blurring the line between grassroots movements and celebrity speculation. “Dogecoin’s spike wasn’t random; it was us, mobilizing behind memes.”

Ignoring or actively disregarding financial fundamentals over hype and momentum can also carry serious risks for the investors in this community. Extreme volatility and losses have been part and parcel of WallStreetBets since its inception.

The same feedback loops that sustain outsider financial innovation can also amplify instability when they operate in reverse. So herding-induced volatility is likely inherent to meme investing and will stay so.

“We can move markets now, but it’s dangerous, if the hype dies, so do the gains.”

Another danger is that influential members can use their reach to manipulate markets for their own gain, at the risk of leaving other community members as “bagholders” to take the losses after a successful “pump and dump” scam-like strategy.

Conclusion: Digital Communities Are Now Market Actors

For investors, platforms, and regulators, the key lesson of this study and Wallstreetbets’ success is that market power is no longer confined to institutions.

Instead, it can also emerge from digitally networked communities capable of turning narratives into coordinated financial action. Therefore, meme investing should be understood as market structure innovation, not just market noise.

It also reveals that group identity can work as a backbone for building alternative “institutions”.

This blurs the line between financial interest and social standing. Meme investors assign social meaning to their capital: buying a meme asset is at once a speculative bet and a communal gesture.

“The performative dimension of outsider identity, evident in the embrace of derogatory labels and the strategic use of humor, functions as what we term “identity-as-infrastructure,” supplying the motivational basis for collective financial experimentation.”

Overall, the emergence of meme investing proves that in the age of digital information, finance is likely to evolve in new, unexpected directions. And traditional financial institutions and regulators might be lagging behind, giving meme investors more leeway to keep innovating.

Study Referenced

^{1. Lennart Ante. Outsider innovation in digital investor communities: How meme coordination reshapes market participation. Technology in Society. Volume 88, September 2026, 103439. https://doi.org/10.1016/j.techsoc.2026.103439}