Meme stocks like GameStop, AMC pose risks to financial stability, Fed says

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Stock-market volatility resulting from a surge in first-time investors who congregate on social media could pose a risk to the U.S. financial system, the Federal Reserve said in its biannual financial stability report released Monday.

The report noted that new trading platforms that offer zero-commission trading, fractional shares and flashy and engaging graphics have helped recruit a generation of young traders to the stock market, and the size of this new demographic makes it important for regulators to monitor.

“Social media can contribute to an echo chamber in which retail investors find themselves communicating most frequently with others with similar interests and views, thereby enforcing their views, even if these views are speculative or biased,” the report said.

The Fed reported that so far, wild swings in the prices of popular meme stocks, including GameStop Corp.
GME,
+2.53%

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