A meme stock is a stock that gains popularity with retail investors through social media and the spread of internet memes amongst stock traders on platforms such as Reddit's r/wallstreetbets.
As a result of their popularity, meme stocks can rise very rapidly to astronomical price points far beyond what any sort of fundamental analysis might indicate to be their true underlying value.
In particular, the rise of meme stocks has been facilitated by the advent of "gamified" smartphone-based trading platforms with low-cost or commission-free trading that allow ordinary investors with small amounts of capital to trade partial shares and risky leveraged options, allowing millions of retail investors to band together to bring about significant price fluctuations.
In extreme cases, meme stock rallies have led to billions of dollars of losses and/or gains for major Wall Street players such as banks and hedge funds, most famously in the Gamestop Short Squeeze of early 2021, which led to unjustified accusations of illegal market manipulation from Wall Street professionals and even congressional and federal investigations (which turned up no evidence of malfeasance).
In addition to Gamestop, other notable meme stocks have included AMC and Bed Bath & Beyond. Typically, meme stock companies are stocks that are out of favor with professional investors for various reasons, but are seized upon by retail investors either because the "just like the stock," or just for the lulz.
The retail investors driving meme stock rallies often revel in the power of their massed funds and take pleasure in "sticking it to the man" in the form of big Wall Street firms. That being said, meme stock rallies often end badly for most of the retail investors involved; while a few might sell at the perfect moment and come out ahead, the majority inevitably HODL for too long, maintaining "diamond hands" and hoping for the stock to "moon," and end up becoming "bag holders" when the memes move on and the stock falls back down to earth, while it is often the sophisticated high-frequency momentum traders on Wall Street that come away with the largest gains.