WallStreetBets is a whole new world for those used to obtaining stock market updates from sources such as newspapers and publications – a place where millions of members can instantaneously interact and trade off ideas with one another regarding potential new investments.
WallStreetBets, also known as r/wallstreetbets or WSB, is an extremely popular subreddit where participants discuss stock and option trading. Home to over 11.8 million users, WallStreetBets is best known for housing aggressive trading strategies amongst its often young retail trader audience.
Discussing stocks on WallStreetBets is not a brand new phenomenon, in fact it has been around for over 10 years since it was originally founded on 31 January 2012 by Jaime Rogozinski. Since then, the founder has been removed as a moderator by Reddit administrators.
Users within the community tend to thrive off short term success and often see high-risk day trading as an opportunity to quickly enhance their trading profile. The high-risk aspect of their tendencies originates from an apparent ignoration of risk management techniques and fundamental investment practices. Trading trends such as the one being described may also be attributed to the increasing popularity of no-commission brokers and online trading via mobile devices.
WallStreetBets also contains little censorship with users often using profanity when referring to themselves and others, a sign of how different this trading trend is in comparison to traditional means.
WallStreetBets is without a doubt another example of an entity formed through the booming social media era, where information and ideas can spread like wildfire, often helping lead to the aggressive trading strategies. The GameStop short squeeze in January 2021 is a prime example of the effect this community can have on a stock…
A short squeeze refers to pushing a stock’s price up significantly within a small timeframe and squeezing out people who had the stock down to “short”. Many followers of the market have said that this incident was unprecedented in their years of following events. So what happened exactly?
The squeeze was initiated by users of the WallStreetBets stock subreddit following a comment from Citron Research predicting that the value of GameStop (GME) would decrease, in addition to GME being heavily shorted by hedge funds. This prompted a rallying squeeze from the community with the stock pricing increasing by more than 600% by January 26, only four days on from when Citron’s comment was made. During this period, the high volatility of stock caused trading to be nullified multiple times.
Certain users within the community posted numerous times to help drum up interest within GME, and after the stocks price finally closed up 92.7% on January 26, Elon Musk tweeted a link to the popular subreddit. This skyrocketed the number of members by millions within the space of a week.
WallStreetBets stock reddit also caused a short squeeze on AMC the following day. With these two high profile cases within such close proximity, most notably the GameStop saga, the memberships of the subreddit increased by over 2.4 million, whereas, previously it took just shy of a decade to reach 2.2 million.
Each day on the subreddit new topics, tips and trading strategies are discussed across a variety of different stocks. However, there is a recurring trend with the most talked about stocks within the WallStreetBets community.
A recent article from Markets Insider detailed the top 10 stocks the forums users are focused on in the beginning months of 2022:
With the popular forum proving its power and effectiveness through the GME short squeeze and other similar situations like AMC Entertainment, it is interesting to speculate what the future holds for WallStreetBets stocks.
Whilst another GameStop saga is unlikely to repeat itself, the community will undoubtedly attempt to make similar moves going forward to stocks they believe are a culpable target in the hope of a repeat. After all, the fact that a lot of redditors boosted their financial profiles significantly in such a short period of time, this is always going to attract new, young traders to the community.
Meme stocks should not be ignored. A meme stock refers to the shares of a company that have gained a cult-like following across social media platforms in a viral manner – often young and inexperienced traders. The value of such a company’s shares tends to be rooted more so in the social sentiment rather than core economic indicators. With GME’s story in the early months of 2021 as a prime example of how a meme stocks profile can suddenly change, any similar movements of a company’s popularity due to the WallStreetBets community can result in a drastic shift in the share price in next to no time.
StockGeist’ai’s innovative programming developers are working on an inclusive sentiment tracking dashboard for WallStreetBets stocks, powered by AI. At this moment in time, all of the stocks discussed on the wsb subreddit can be found on our online platform, where users can find the real time stock sentiment pulled from messages across online platforms. Also, discover how you can incorporate our innovative data into your own project with StockGeist.ai’s stock news sentiment API.