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.
Overview
The subreddit, describing itself through the tagline "Like
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 "
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]
History
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:
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]
GameStop short squeeze
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
On January 22, 2021, users of r/wallstreetbets initiated a
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
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]
Effect on the Robinhood trading platform
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]
Box spread ban
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]
The "infinite leverage" glitch
Around November 2019, a user known as u/ControlTheNarrative found a bug in Robinhood's trading platform and exploited it to
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]
Robinhood restricts trading
On January 28, 2021, during the GameStop short squeeze, Robinhood,
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]
Spawn of meme stocks
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]
