The Comeback of Momentum (MMT): Can This Strategy Last?

MMT’s Recent Rally: Social Media, Retail Investors, and Market Volatility

The latest spike in Momentum (MMT) has reignited discussions about the viability of meme stocks and the impact of retail trading, fueled by a mix of online buzz, individual investor actions, and speculative enthusiasm. While the 2021 GameStop (GME) short squeeze remains the most notable example of social media shaking up the markets, MMT’s post-2021 performance highlights a broader transformation in investor attitudes and market behavior. This article explores whether MMT’s renewed momentum is grounded in solid fundamentals or simply another episode of speculative mania.

The Power of Social Media and Retail Investors

Research consistently shows that online sentiment wields significant influence over retail investment choices. Positive discussions on platforms such as Reddit and Twitter are closely linked to rising stock prices, as seen with MMT. For example, a 2024 study analyzing tens of thousands of tweets found that viral conversations and optimistic sentiment often precede price jumps, even when a company’s financial health is questionable. The GameStop saga of 2021 perfectly illustrated how coordinated efforts on forums like r/WallStreetBets can defy traditional market expectations and send prices soaring.

Today’s retail investors—especially younger, more confident traders—are increasingly guided by narratives circulating online. A 2025 study found that engagement on social platforms is a strong predictor of short-term trading activity, with these channels amplifying urgency and reinforcing existing beliefs. For MMT, this creates a feedback loop: increased online attention leads to higher trading volumes, which then drives further price swings. However, this cycle often ignores underlying financial realities, resulting in a gap between a stock’s market price and its actual value.

Investor Psychology: Overconfidence and Herd Mentality

Behavioral economics sheds light on the psychological forces behind MMT’s comeback. Overconfidence—where investors believe they can outsmart the market—is widespread in social media-fueled trading. This is compounded by herd behavior, as individuals rush to follow the crowd and avoid missing out. A 2023 study highlighted how these tendencies can inflate speculative bubbles, with decisions driven more by emotion and group dynamics than by careful analysis.

The GameStop episode is a prime example: retail traders, empowered by online communities, saw GME not just as a struggling business but as a rallying point against institutional short sellers. MMT is now attracting similar attention, with social media framing it as another underdog story. While this can produce rapid gains, it also increases the risk of sharp downturns when sentiment shifts.

Balancing Sentiment and Fundamentals

Whether MMT’s price surge can last depends on the relationship between online sentiment and traditional financial indicators. While studies recognize the predictive value of social media chatter, they warn that sentiment alone is not enough. A 2024 analysis stressed that stock movements are best understood by considering sentiment, trading activity, and fundamentals such as earnings and debt. For MMT, long-term success will require its business model to justify its valuation—something that viral hype often overshadows.

News about sustainability adds another layer of complexity. Positive environmental or social initiatives can boost investor confidence, but their effect on share prices is often overshadowed by the immediate impact of social media-driven speculation. For instance, while MMT’s green initiatives may appeal to ESG-minded investors, these factors are unlikely to offset the volatility caused by retail trading frenzies.

Risks and Broader Market Effects

MMT’s speculative rally comes with significant risks. First, price movements driven by social media are highly susceptible to sudden reversals. A 2023 meta-analysis found that the effect of sentiment on returns is unpredictable, with hype often leading to negative consequences. Second, regulatory attention is increasing. The SEC’s 2024 actions against social media-based market manipulation reflect growing concerns about the stability of retail-driven trading.

Traditional financial theories, such as the Efficient Market Hypothesis (EMH), are being challenged by the irrational exuberance seen in today’s markets. Behavioral finance research suggests that prices no longer always reflect all available information, raising doubts about the long-term stability of stocks like MMT that rely heavily on sentiment rather than fundamentals.

Conclusion: Passing Fad or Lasting Change?

MMT’s resurgence signals a fundamental change in market dynamics, with social media sentiment and retail investor psychology playing a larger role than ever before. While this environment can create rapid gains, its sustainability is far from certain. Academic research indicates that speculative bubbles—driven by overconfidence and herd behavior—are likely to burst when enthusiasm fades or financial realities set in.

For investors, the challenge is to balance insights from social media with thorough analysis of a company’s fundamentals. MMT’s upward trajectory may continue if it can adapt its business to meet the expectations of its retail investor base, but relying solely on viral trends is a risky approach. As the boundaries between innovation and instability blur, both regulators and investors must tread carefully to avoid repeating the excesses witnessed in 2021.