Definition of Cult Stock





What is a "cult stock"? What is meant by the term "cult stock"? What is the definition of the term "cult stock"?

As you are probably aware, a "cult movie" is a movie that has developed a fanatical base of fans over the years. Examples of "cult movies" would be the Rocky Horror Picture Show or Star Wars.

Stock Cult Member IllustrationA "cult stock" is the same idea, in that a cult stock has a fanatical and rabid shareholder base that are exceedingly bullish on the prospect of the company through good times and bad.

Shareholders in a "cult stock" rarely care about fundamentals. Instead, they are usually attracted to the story that the company is pitching, such as working on a cure for cancer or a new "game-changing" gadget. Small biotech companies are often "cult stocks" due to their extremely loyal shareholders.

Shareholders in "cult stocks" usually live and die by the daily moves in their stock. If the stock goes up, it's "shorts covering and retail investors moving in". If the stock goes down, then it's "co-ordinated bear raids and weak traders dumping positions".




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