Wallstreetbets (WSB)

Wallstreetbets (WSB) is a community on the social media site Reddit, found at r/wallstreetbets, where members discuss stocks, options and other speculative trades in a deliberately crude, joking style. Created in 2012, it grew into one of the largest online gathering places for retail traders and became known for posts showing huge gains or ruinous losses from single bets.

WSB became world news in January 2021, when its members piled into shares of the video-game retailer GameStop and helped trigger a dramatic short squeeze that hurt several hedge funds. The episode led to congressional hearings, a regulatory review of market plumbing and a lasting debate about online communities and markets. Its slang and attitude also spread into crypto culture.

Picture a noisy bar where amateur gamblers swap tips, brag about wins, laugh at each other's losses and egg one another on to bigger bets. Now imagine millions of people in that bar at once, many with trading apps on their phones. Most of the time it is entertainment. Occasionally, enough of them back the same idea that their combined buying moves real markets.

That is what happened with GameStop. Large professional investors had bet that its shares would fall. The forum's members bought so many shares, and so many options, that the price shot up and the professionals were forced to buy back at a loss, pushing it higher still.

The forum was started in 2012 by Jaime Rogozinski and for years was a niche corner of Reddit. Its growth accelerated in the late 2010s as commission-free trading apps made it cheap for individuals to trade shares and options from their phones. By 2020, with many people at home during the pandemic and receiving stimulus payments, membership climbed into the millions.

GameStop was one of the most heavily shorted stocks in the United States in 2020: funds engaged in short selling had borrowed and sold a very large share of its available stock, betting on decline. A WSB member who also posted on YouTube as Roaring Kitty had been sharing a bullish case and his own position for more than a year. In January 2021, buying from forum members and others, much of it through call options, sent the price from under 20 dollars at the start of the month to an intraday high of 483 dollars on 28 January, before a later stock split.

Short sellers raced to close positions. The hedge fund Melvin Capital, one of the best-known short sellers, needed a cash injection of about 2.75 billion dollars from other firms and later closed. On 28 January several retail brokers restricted buying of GameStop and other popular stocks, citing higher collateral demands from their clearing house, which angered traders and politicians across the spectrum. The House Committee on Financial Services held a hearing in February 2021 with brokers, a hedge fund, Reddit and Roaring Kitty himself. A staff report from the Securities and Exchange Commission in October 2021 found that ordinary buying, rather than short covering alone, drove much of the rise. The story was later dramatised in the 2023 film Dumb Money.

WSB's style mixes self-mockery with bravado. Members call themselves "apes" and "degenerates", celebrate all-in "YOLO" trades and post screenshots of losses as dark comedy. Phrases popularised or spread by the forum include diamond hands for refusing to sell, "paper hands" for selling early and "to the moon" for hoped-for price rises. Many of these terms moved straight into crypto communities, where meme coins borrowed the same humour. In the weeks after the GameStop squeeze, Dogecoin also surged amid similar online enthusiasm, a sign of how closely the two worlds overlapped.

• Losses. For every celebrated winner, many members lose money, especially on short-dated options, which can expire worthless within days.
• Manipulation concerns. Critics argue that coordinated hype can resemble market manipulation or pump and dump schemes, and that late buyers bear the cost when prices collapse. Regulators have generally treated sincere public discussion of stocks as lawful, while pursuing cases where people spread false claims or secretly sold into the hype.
• Herd behaviour. The forum's energy can feed fear of missing out and discourage doubt.
• Tone. Its humour often includes offensive language, and moderators have periodically clashed over rules and control of the community.

Supporters see WSB as a sign that individual investors can organise and challenge established firms. Sceptics see a casino with a chat room attached. Both views shaped the debate over retail trading after 2021, and Roaring Kitty's return to social media in May 2024 set off another short-lived burst of trading in GameStop shares.