Type of site | Subreddit |
---|---|
Founded | January 31, 2012 |
Founder(s) | Jamie Rogozinski |
Key people | u/OPINION_IS_UNPOPULAR (moderator) |
URL | reddit |
Users | 15 million subscribers [1] |
r/wallstreetbets, also known as WallStreetBets or WSB, is a subreddit where participants discuss stock and option trading. It has become notable for its colorful and profane jargon, aggressive trading strategies, and for playing a major role in the GameStop short squeeze that caused losses for some US firms and short sellers in a few days in early 2021. [2]
The community is run by u/OPINION_IS_UNPOPULAR, [3] who has moderated the community for over 9 years.
The subreddit, describing itself through the tagline "Like 4chan found a Bloomberg terminal", [4] is known for its aggressive trading strategies, which primarily revolve around highly speculative, leveraged options trading. Members of the subreddit are often young retail traders and investors who ignore fundamental investment practices and risk management techniques, so their activities are often considered gambling. The growing popularity of no-commission brokers and mobile online trading has potentially contributed to the growth of such trading trends. Members of the communities often see high-risk day trading as an opportunity to quickly improve their financial conditions and obtain additional income. Some of the members tend to use borrowed capital, like student loans, to bet on certain " meme stocks " that show popularity within the community. [5] [6] [7] [8]
The subreddit is also known for its use of profane and juvenile humor, with members often referring to themselves as "autists", "retards", "degenerates", and "apes". [8] [9] Users also frequently use slang such as "stonks" for stocks; "tendies" for gains or profits; "gay bears" for those who expect a stock to decline, for stock shorters, or as a general insult; "DD" (from "due diligence") for analysis of potential trades; "bagholder" for one whose position has severely dropped in value; "diamond hands" for holding stocks adamantly; and "paper hands" for selling at the first sign of loss. [10] [11] [12] Members of the community post memes and joke posts about the financial market, with the Meme Man (also known as Stonks guy) becoming "emblematic" of the subreddit. [13]
WallStreetBets was founded in 2012 by 39-year-old American citizen Jamie Rogozinski. [14] "When I created the sub, I was looking for a community, a place for people to talk about high-risk trades in an unapologetic way for people to make some short term money with disposable income," Rogozinski told TMZ Live. [15] Within four years, r/wallstreetbets had begun to flourish, accruing roughly 100,000 subscribers by the end of 2016. [16] Reddit's administrators removed Rogozinski from the subreddit and banned him from moderating the community in April 2020, a month after he attempted to trademark the subreddit name. In February 2023 he filed a lawsuit against Reddit for breach of contract and trademark infringement, [17] [18] which was dismissed in July 2023. [19] Over time, r/wallstreetbets subscriber base continued to grow. At the end of 2022, WallStreetBets' subscriber count had risen to 13.3 million, with the 10th highest comments-per-day of any subreddit. [16]
Among the most prominent of r/wallstreetbets subscribers: Turing Pharma CEO Martin Shkreli. Considered by BBC to be the most hated man in America, Martin Shkreli was open about his identity to followers of r/wallstreetbets, frequently posting his theses on biotech and healthcare stocks (in one instance betting $20 million on the outcome of a drug trial [20] ). Other notable names to visit the subreddit include billionaire investor Mark Cuban, [21] popular YouTube content creator Mr. Beast, [22] well-known Twitch streamer Pokimane [23] (who was a full-moderator in 2020), and Tesla CEO Elon Musk, although he has not posted on the subreddit. [24]
Graphs are unavailable due to technical issues. There is more info on Phabricator and on MediaWiki.org. |
Graphs are unavailable due to technical issues. There is more info on Phabricator and on MediaWiki.org. |
On January 22, 2021, users of r/wallstreetbets initiated a short squeeze on GameStop, pushing their stock prices up significantly. This occurred shortly after a comment from Citron Research predicting the value of the stock would decrease. [26] The stock price increased more than 600 percent by January 26, and its high volatility caused trading to be halted multiple times. [27] [28] A series of posts by user u/DeepFuckingValue on the subreddit helped to generate interest in the stock. [29]
After the GameStop stock closed up 92.7 percent on Tuesday, January 26, Elon Musk tweeted out a link to the r/wallstreetbets subreddit. [30] This caused a spike in subscribers to r/wallstreetbets. On January 24, 2021, it had 2.06 million subscribers, which increased nearly threefold to 6.2 million on January 29, 2021. [31]
On January 27, r/wallstreetbets users also triggered a short squeeze on AMC, another company with heavily shorted stock, similar to GameStop. [32]
On January 27, the official r/wallstreetbets Discord server was banned for "hateful and discriminatory content". Discord denied that the ban was related to the ongoing GameStop short squeeze. [33] In an official statement posted to the r/wallstreetbets subreddit, moderators claimed that their efforts to automatically delete content that violated rules had been overwhelmed by the sheer influx of users, and criticized Discord for not providing the tools needed to take action to curtail hate speech on the server. [34] [ better source needed ] Subsequently, the r/wallstreetbets Discord server was brought back online, and staff from Discord have been reported assisting with moderation. [35]
The subreddit was set to private by the moderators at around 7:00 p.m. EST on January 27, before being made public again around an hour later. [36] Within one week of the GameStop short squeeze, the subreddit had gained over 2.4 million new subscribers, while it had taken nine years to gain the first 2 million subscribers. [37] As of February 18, 2023, the subreddit had 13.6 million followers, and is the second largest subreddit in the "Business, Economics, and Finance" category. [38]
A few days following the short squeeze, some subreddit users started to pay for billboards depicting messages supporting r/wallstreetbets across the country, which included messages such as "buying" and "holding" GME shares, other messages consisted of "we like the stock" and joining the subreddit, labelling it as a "movement".[ citation needed ] Reddit also ran a five-second commercial during Super Bowl LV celebrating the subreddit, stating that "underdogs can accomplish just about anything when we come together around a common area." [39]
As of December 2022 [update] , many members of the subreddit used the mobile app Robinhood to trade stocks and options. Some members have been responsible for significant feature removals and bug fixes after identifying and publishing ways to exploit them. [40]
Around January 2019, a user known as u/1R0NYMAN sold a box spread creating a $300,000 credit that should have netted him from $40,000–50,000 over the course of two years. He described the trade as a way to make "risk-free money", but he was unaware of the assignment risk. A few days later, some of the options were exercised against him, causing a loss of over $60,000; calculating from the original amount in the user account, $5,000, the negative return of the trade was 1,832.99 percent. As a result, Robinhood decided soon after that it would no longer allow the trading of box spreads. The user withdrew $10,000 from the account before the positions were closed; it is believed by the news website MarketWatch that the brokerage itself took the majority of the loss. [41]
Around November 2019, a user known as u/ControlTheNarrative found a bug in Robinhood's trading platform and exploited it to leverage his original deposit of $2,000 up to roughly $50,000, resulting in a leverage ratio of approximately 25:1. He sold covered calls and, thanks to the bug, the credit that he received appeared as liquid money on his account. He used the money to buy put options on Apple stock, a trade which led to a loss of $46,000, enormous relative to his initial deposit of only $2,000. [42] He recorded the live reaction to his loss and uploaded it on his YouTube channel. [43] Many other users tried to exploit the glitch, which they referred to as the "free money cheat code", before it was fixed, with one in particular claiming to have opened a $1,000,000 position from a $4,000 deposit. [44]
On January 28, 2021, during the GameStop short squeeze, Robinhood, TD Ameritrade, E-Trade, and Webull restricted the trade of heavily shorted stocks such as GameStop, AMC, BlackBerry Limited, Nokia, and Koss Corporation on their platforms. [45] Many of the brokerage firms, including Robinhood, stated that the restrictions were the result of clearing houses raising the collateral required for executing trades on highly volatile stocks. [46] Numerous members of the community have since expressed outrage directed towards those companies, particularly Robinhood. Efforts by r/wallstreetbets members and others across the Reddit platform plummeted Robinhood's star rating in both the iOS and Android app stores to one star through review bombing by January 28, though intervention by Google increased its rating to 2.2 (as of January 30 [47] ) by deleting one-star reviews. [48] Class-action lawsuits were subsequently filed against Robinhood for the restrictions on trading. [49]
The popularity of GameStop short squeeze on r/wallstreetbets spawned interested in other heavily shorted stocks, such as AMC and Bed Bath & Beyond, which saw similar surges in prices. This was partly driven by the same dynamics of a short squeeze, as well as a sense of camaraderie and rebellion among individual investors who were taking on large institutional investors. In the aftermath of the events, some of the companies involved, including AMC, saw their stock prices decline significantly. [50]
In the stock market, a short squeeze is a rapid increase in the price of a stock owing primarily to an excess of short selling of a stock rather than underlying fundamentals. A short squeeze occurs when demand has increased relative to supply because short sellers have to buy stock to cover their short positions.
"The Man" is a slang phrase used in the United States to refer to figures of authority, including members of the government. Though typically used as a derogatory connotation, the phrase may also be used as a term of respect or praise. The phrase "the Man is keeping me down" is commonly used to describe oppression, while the phrase "stick it to the Man" encourages civil resistance to authority figures.
GameStop Corp. is an American video game, consumer electronics, and gaming merchandise retailer. The company is headquartered in Grapevine, Texas, and is the largest video game retailer worldwide. As of January 28, 2023, the company operates 4,413 stores including 2,949 in the United States, 216 in Canada, 419 in Australia and 829 in Europe under the GameStop, EB Games, EB Games Australia, Micromania-Zing, ThinkGeek and Zing Pop Culture brands. The company was founded in Dallas in 1984 as Babbage's, and took on its current name in 1999.
Reddit is an American social news aggregation, content rating, and forum social network. Registered users submit content to the site such as links, text posts, images, and videos, which are then voted up or down by other members. Posts are organized by subject into user-created boards called "communities" or "subreddits". Submissions with more upvotes appear towards the top of their subreddit and, if they receive enough upvotes, ultimately on the site's front page. Reddit administrators moderate the communities. Moderation is also conducted by community-specific moderators, who are not Reddit employees. It is operated by Reddit, Inc., based in San Francisco.
Payment for order flow (PFOF) is the compensation that a stockbroker receives from a market maker in exchange for the broker routing its clients' trades to that market maker. It is a controversial practice that has been called a "kickback" by its critics. Policymakers supportive of PFOF and several people in finance who have a favorable view of the practice have defended it for helping develop new investment apps, low-cost trading, and more efficient execution.
Some communities on the social news site Reddit are devoted to explicit, violent, or hateful material, and have been the topic of controversy. Controversial Reddit communities sometimes receive significant media coverage.
Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California. It operates an electronic trading platform that facilitates commission-free trades of stocks, exchange-traded funds and cryptocurrencies as well as individual retirement accounts via a mobile app introduced in March 2015. Robinhood is a FINRA-regulated broker-dealer, registered with the U.S. Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation. The company's revenue comes from three main sources: interest earned on customers' cash balances, selling order information to high-frequency traders and margin lending. As of December 2023, Robinhood had 23.4 million funded accounts and 10.9 million monthly active users. In April 2022, Robinhood rolled out a cryptocurrency wallet to more than 2 million users.
Discord is an instant messaging and VoIP social platform which allows communication through voice calls, video calls, text messaging, and media and files. Communication can be private or take place in virtual communities called "servers". A server is a collection of persistent chat rooms and voice channels which can be accessed via invite links. Discord runs on Windows, macOS, Android, iOS, iPadOS, Linux, and in web browsers. As of 2024, the service has about 150 million monthly active users and 19 million weekly active servers. It is primarily used by gamers, although the share of users interested in other topics is growing. As of March 2024, Discord is the 30th most visited website in the world with 22.98% of its traffic coming from the United States.
r/The_Donald was a subreddit where participants created discussions and Internet memes in support of U.S. president Donald Trump. Initially created in June 2015 following the announcement of Trump's presidential campaign, the community grew to over 790,000 subscribers who described themselves as "Patriots". The community was banned in June 2020 for violating Reddit rules on harassment and targeting. It was ranked as one of the most active communities on Reddit.
Vladimir Tenev is a Bulgarian-American entrepreneur who is the co-founder and CEO of Robinhood, a US-based financial technology services company.
Melvin Capital Management LP was an American investment management firm based in New York City. It was founded in 2014 by Gabriel Plotkin, who named the firm after his late grandfather.
Webull Corporation is a holding company incorporated in the Cayman Islands and headquartered in New York. Its subsidiaries operate an electronic trading platform, accessible via mobile app and desktop computer, offering commission-free and low-cost trading of stocks, exchange traded funds, options, margins, and cryptocurrencies. Its U.S.-based subsidiary, Webull Financial LLC, is a security broker registered with the U.S. Securities and Exchange Commission and a member of FINRA and SIPC, offering trading services to customers in the U.S. It also has licensed subsidiaries offering trading services in Hong Kong and Singapore.
Keith Patrick Gill is an American financial analyst and investor known for his posts on the subreddit r/wallstreetbets. His analyses of GameStop stock, and details of his resulting investment gains—posted on Reddit under the username DeepFuckingValue (DFV) and on YouTube and Twitter as Roaring Kitty—were cited as a driving factor in the GameStop short squeeze of January 2021, and as a spark for the subsequent trading frenzy in retail stocks. The rising stock value allowed Gill to turn a US$53,000 investment into one worth close to $50 million.
In January 2021, a short squeeze of the stock of the American video game retailer GameStop and other securities took place, causing major financial consequences for certain hedge funds and large losses for short sellers. Approximately 140 percent of GameStop's public float had been sold short, and the rush to buy shares to cover those positions as the price rose caused it to rise even further. The short squeeze was initially and primarily triggered by users of the subreddit r/wallstreetbets, an Internet forum on the social news website Reddit, although a number of hedge funds also participated. At its height, on January 28, the short squeeze caused the retailer's stock price to reach a pre-market value of over US$500 per share, nearly 30 times the $17.25 valuation at the beginning of the month. The price of many other heavily shorted securities and cryptocurrencies also increased.
A meme stock is a stock that gains popularity among retail investors through social media. The popularity of meme stocks is generally based on internet memes shared among traders, on platforms such as Reddit's r/wallstreetbets. Investors in such stocks are often young and inexperienced investors. As a result of their popularity, meme stocks often trade at prices that are above their estimated value – as based on fundamental analysis, and are known for being extremely speculative and volatile.
Citadel Securities LLC is an American market making firm headquartered in Miami. It is one of the largest market makers in the world, and is active in more than 50 countries. It is the largest designated market maker on the New York Stock Exchange.
Meme Man, sometimes also referred to as Mr. Succ or the Stonks guy, is a character often featured in internet memes. He is depicted as a 3D render of a smooth, bald, and often disembodied blue-eyed male head. He was popularized in the mid-2010s by the artist "Special meme fresh", and became a common character in many surreal memes, a genre of internet humor inspired by surrealism. During the 2021 GameStop short squeeze, Meme Man was popularized by users of the subreddit r/wallstreetbets as the face of the "stonks" meme.
Gaming Wall St is a documentary television miniseries directed by Tobias Deml and narrated by Kieran Culkin. The two-episode series was released on March 3, 2022 on HBO Max. It explores the causes that lead to the 2021 GameStop short squeeze, and the dark underbelly of Wall Street that the phenomenon unearthed: payment for order flow, creative accounting, abuses of the short selling mechanism like naked short selling, corporate overvoting and failures to deliver (FTDs).
Dumb Money is a 2023 American biographical comedy-drama film directed by Craig Gillespie and written by Lauren Schuker Blum and Rebecca Angelo. It is based on the 2021 book The Antisocial Network by Ben Mezrich and chronicles the GameStop short squeeze of January 2021. The film features an ensemble cast that includes Paul Dano, Pete Davidson, Vincent D'Onofrio, America Ferrera, Nick Offerman, Anthony Ramos, Sebastian Stan, Shailene Woodley, and Seth Rogen.
The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees is a 2021 non-fiction book by Ben Mezrich about the GameStop short squeeze.
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