Reddit’s WallStreetBets was the GameStop Kingmaker, but longtime users say the thrill is gone
Reddit’s WallStreetBets was the place to be last year for meme mania. These days, some fans say it’s hardly worth clicking.
Those who have already scoured the online messaging forum for cheeky and unexpected business ideas say they mostly find members still discussing stocks like GameStop Corp.
and AMC Entertainment Holdings Inc.
Constructive feedback on exchanges, some users complain, has largely been replaced by cheerleading. Enthusiasts who were once glued to the forum – who watched power users like Keith Gill or “DeepF—ingValue” post bold bets on GameStop – say they’ve largely abandoned the page in favor of other trading communities.
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Demystifying the GameStop Reddit saga
When GameStop’s stock soared in January 2021, it took Wall Street investors by surprise. A group on the Reddit forum WallStreetBets had coordinated stock purchases to support the declining video game retailer’s share price. On January 27 at 1 p.m. ET, join the reporters who led the coverage for a discussion of this moment in investing history.
Of course, the market has also changed. Last year, the S&P 500 hit dozens of all-time highs, making professional and amateur investors look smart. This year, stocks have had a rough start, especially the kinds of tech companies and flashy companies favored by the day-trading crowd.
A year ago, however, WallStreetBets was the engine that propelled the newbie trader. The advice posted there was quickly amplified on TikTok, Twitter and messaging platform Discord, enabling hordes of individual traders around the world to act in concert and even boost markets. WallStreetBets members have grown from less than two million in early January 2021, just before GameStop shares took off, to over 11 million today.
While the meme revolution has made trading cool, it’s also made it harder to separate the next big stock market sensation from the next big loser. Investments that have been applauded on forums like WallStreetBets have risen because day traders said they would do it, regardless of the underlying value of a trade.
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So far this year, the tech-heavy Nasdaq Composite Index is down 12% and entered correction territory. The VanEck Social Sentiment ETF,
which is known as the BUZZ ticker and tracks popular stocks on social media, is down 18%. GameStop and AMC fell again, with a decline of 28% or more since the start of the year.
In the midst of such large declines, it could become more difficult for smaller traders to regroup and increase a stock, unless there is some real good news about a company.
WallStreetBets, or WSB as users call it, was established in 2012 by an IT consultant who grew tired of traditional financial advice. This has never been a sober corner of the internet. Users post under aliases like pim9daddy214 and Boogyman422 and exchange unpublishable profanity. Markets are considered a giant casino, but where big wins and big losses are celebrated. After all, as many members would say, “YOLO” – “you only live once”.
Sol Hu came across WSB about four years ago. New to trading, Mr. Hu was immediately hooked. In 2019, he was trading full time after quitting his job as a research technician. Back then, he said, he checked WallStreetBets every morning and scrolled and commented for hours throughout the day.
Mr. Hu liked to chat with others when he wanted advice on a particular trade and appreciated honest, albeit sometimes harsh, feedback. “Now it’s just ‘yes men’ comments,” said Mr. Hu, who is 31 and lives in New Jersey.
He still logs on to the site briefly for several days, but spends most of his time browsing Twitter for new trading ideas and discussing strategy with his cousin.
WSB remains one of the most popular Reddit groups. But veterans like Mr. Hu say newbies take more than they give. The number of text messages, as well as the total number of comments on the main BMS page, decreased. On an average day last November, there were about 27,000 comments on the forum’s main page, which features “hot” content, up from about 47,000 a year earlier, according to a Wall Street Journal analysis of the data. from TopStonks, which tracks stocks mentioned on Reddit and other sites.
Many new users continue to be drawn to the original meme stocks. GameStop stocks were still the second most mentioned stock on WSB in January, according to TopStonks data from last week. AMC placed sixth.
Mark Villanueva came across the site last year and was intrigued by users who said they were making a lot of money.
In February, Mr. Villanueva noticed that WSB was talking about a special purpose acquisition company called Churchill Capital Corp IV, or CCIV. SPAC discussions were banned on WSB at the time, according to the forum’s own content guidelines, although Mr. Villanueva was unaware of this.
Mr. Villanueva purchased approximately $3,000 worth of stock. Their value plummeted within days and he sold it all, losing around $1,150. CCIV later merged with electric vehicle company Lucid Group Inc.
to make it public.
“I thought these guys really knew what they were talking about,” said Villanueva, who is 32 and lives in suburban Chicago. He now prefers another Reddit forum called Superstonk, which focuses on GameStop.
Like other Reddit forums, WSB relies heavily on its own members, instead of armies of tech employees, to police its content. Volunteer moderators use bots designed to scour and delete anything that violates forum rules, and moderators can also manually delete posts. Users are not supposed to post about cryptocurrencies, companies with a market cap of less than $1.5 billion, or so-called OTC stocks that are not publicly traded, among other rules.
But posts that break the rules can go unnoticed. Some users said they have become more wary of users seeking to drive up the stock prices of lesser-known companies in an effort to offload them to novice investors.
A WSB moderator acknowledged that the site’s explosion into the mainstream has led to “people trying to influence prices”, but said moderators are “working pretty hard to keep that at bay”. He said the team had developed “automated solutions” to help prevent spam.
The moderator noted that WallStreetBets had recently made changes to help members stay engaged, including launching a live call on weekdays before the market opens for members to discuss their trading ideas and any something else. The moderator and some other users said it was natural for WSB to go through phases.
Last year, Grigory Lukin locked himself in his Toronto apartment for an entire weekend to read popular posts from Keith Gill and others on GameStop that he found on WSB.
In January 2021, he poured around $44,000 in savings into GameStop and made around $115,000 in profit within a few days. He has since quit his job as a financial analyst at Amazon.com Inc.
take early retirement and pursue crafts as a hobby.
Mr Lukin, 35, said he usually spent “a few minutes here and there” on WSB after becoming bored scrolling through Twitter and other Reddit groups, including one called “WallStreetBetsHUZZAH” which popped up on last year. He was still able to find other winning trades on WSB, such as an options trade on food company Dole PLC that earned him a profit of around 60% in one day. He still occasionally trades GameStop stocks and options.
“There are good things there,” Mr. Lukin said, referring to WSB. There’s also “absolutely atrocious advice.”
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