Lack of experience, aggressive strategies, high risks, trolling, overconfidence and memes are the main features of the 2.5M subreddit that has become a notable event on Wall Street. One of the main stock exchange events in January 2021 is the sharp rise in the value of shares in GameStop EU casinos that accept UK players no deposit bonus retail stores. Short sellers who bet on their fall lost $ 3.3 billion. The growth was driven by the users of the Reddit community r / WallStreetBets. They decided to buy up securities and take revenge on hedge funds for underestimating GameStop and trying to drown it – to take their money and try to make money on their own. It turned out to be a disaster for those shorting, and for r / WallStreetBets, GameStop was a source of income.

For example, one of the subreddit traders turned $ 53.5 thousand into $ 22.8 million and continues to keep the shares with him. Success with GameStop is the first time in the history of r / WallStreetBets, when the entire community, known for their risky and rash actions and losses (or earnings) of hundreds of thousands of dollars in a couple of minutes, managed to earn money. “Redditor traders don’t know what they’re doing, and they don’t care that they don’t know what they are doing,” admits Jaime Rogozinski, founder of r / WallStreetBets, who has not been associated with the community since 2020.

The slogan r / WallStreetBets is “as if 4chan found the Bloomberg terminal”. It makes no sense for them to study the financial statements of companies or stock exchange techniques – they simply view the game on the stock exchange as a chance to have fun, rivet memes, and experience the thrill of huge losses or earnings. It is important to say that there have been many posts on Reddit that called to cancel GameStop.

Where r / WallStreetBets came from and how the community works

Subreddit was founded by Jaime Rogozinski in 2012. He wanted to create a place where experienced investors could exchange advice on short-term, high-risk strategies with quick and large returns. “All the talk on Reddit at the time was about long-term investing and index funds, and every time I left a comment or question, I was scolded and called a bad investor,” Rogozinski says. Then he created the r / WallStreetBets subreddit non-uk licensed online casinos like https://www.financials2017.com/new-casinos/ as a serious forum for learning to trade on the stock exchange. But soon an uncontrollable crowd of trolls and pranksters flooded the subreddit, and Martin Shkreli, a former hedge fund manager who is serving a seven-year prison term for securities fraud, became the moderator, writes Money.

Shkreli, who is called “the most hated man in the world”, is known for speculating in the pharmaceutical market. For example, he bought the rights to Thiola, a rare disease drug, and raised its price by 2,000%. And then he repeated this with a drug for the treatment of toxoplasmosis, increasing its price by 5455% – from $ 13.5 to $ 750.

As a result, r / WallStreetBets has become a place where amateur investors:

  • exchange ideas of “quick money”,
  • launch “advertising campaigns” with calls to support certain actions,
  • brag about big earnings by uploading screenshots from online brokerage accounts,
  • and vice versa – they proudly demonstrate how they lost tens and hundreds of thousands of dollars due to an unsuccessful investment, and in return receive support like “You live once! (Yolo) “. The number of investors and community subscribers EU casinos that accept UK players no deposit is constantly growing – thanks to the growing popularity of commission-free brokers and mobile applications for online trading such as Robinhood. Robinhood has become the main tool of r / WallStreetBets, most of the screenshots in threads are from this service. The community also influences the service itself, finding vulnerabilities in it, for example, endlessly increasing its leverage. They also compiled a small dictionary, for example, affectionately calling each other “autistic”, and the financial benefit is called “breasts” (meaning chicken and nuggets). Those who are short are mostly referred to with homophobic epithets.

Typical r / WallStreetBets situation

  • The user enters the subreddit and boasts that he “raised” from $ 3 thousand to $ 102 thousand in month UK casinos not with GameStop, in particular on the “meme” Tesla and Palantir.
  • And a month later he loses everything and gets 2 thousand comments about what an idiot he is. Where do they make money and lose money at r / WallStreetBets Despite the general ironic mood, they try to console the losers – they offer psychological help and try to find words of support. But not all of them – in the support threads some ask “to invest somewhere else so that I can bet against you and rise great.” Initially, Redditors invested in “memorial” shares – which cost no more than $ 5 and are issued by companies with small capitalization. They believed that despite the riskiness, it could make more money faster than safer stocks. “If you find something unstable and risky, you will see people flocking there. Do we reward risks? Oh, yes! ”- said, Rogozinski.

Thus, r / WallStreetBets raised the shares of Plug Power, Virgin Galactic, Nokia, Blackberry. The community could also participate in the increase in the value of Tesla shares since Musk and the company are often mentioned on Reddit, writes Bloomberg. Now the main topic for discussion on r / WallStreetBets is how to make money trading options. According to the community, options deals allow you to bet cheaply on the rise or fall of stocks, but not to buy the securities themselves. They place their bets using intermediaries who sell call options and put options (contracts for the right to buy or sell an asset at a specified price). These intermediaries try not to take risks and when buying a call option, the dealer buys the company’s shares. When the share price rises, the dealer pays for the option and earns on the price difference. And if the number of call options grows, to reduce risks, a massive buy-up of shares occurs – and this is considered a weak point in trading according to r / WallStreetBets. The main tactic of the community is to buy call options of a certain company in the morning to force dealers to buy up shares, thus increasing both the value of securities and options.

At the same time, many members of the community admit that they do not know anything about the companies where they invest money, and simply follow the hype – investing in what is most discussed. In the case of GameStop, the r / WallStreetBets tactic was fully justified for the first time – usually, the community loses some or all of the money. But the subreddit also has a “star” – trader Eddie Choi. He learned to trade options with r / WallStreetBets and was able to make a 19,000% profit on two trades in 2019. Choi first spent $ 766 to buy put options on Roku’s stock and made a profit of $ 49,787 after the stock fell more than 19%. And then he used the money he earned to buy SPDR S&P 500 ETF options – their price also fell, and Choi’s profit surged to $ 107,758. Despite the dislike of shorters, the community greeted Choi’s victory positively.

“Get rich or die trying!”

Investing in high-risk crude oil futures is one example of how the r / WallStreetBets community lives. In 2015, following a call from subscriber drFreshh, the community staked on VelocityShares 3X Long Crude ETNs, which tracked WTI crude oil futures. ETNs are unsecured debt obligations where investors lose everything if bankruptcy occurs. 3X – Three times the risk for newbies. The number of UWTI mentions on Reddit in 2015 grew from 12 to 381, and in the first half of 2016, UWTI was mentioned in the headline of 124 publications. Most are at r / WallStreetBets. UWTI ranked fifth on TD Ameritrade’s Top 10 Stocks and became the most popular among millennials – r / WallStreetBets’ main audience. UWTI did not make it into the top ten favorite stocks of older investors.

And according to Rogozinsky, this is not a coincidence. Sales rose sharply in 2016, with UWTI stock only falling most of the time, sometimes by double-digit percentages non-UK casinos accepting UK players. In May 2015, the UWTI index reached $ 428. In just a year, UWTI shares fell more than 90% to $ 21. Almost none of the Redditors managed to make money on them. r / WallStreetBets has become “a platform for millennials like us to learn about UWTI and lose money,” says community member Jeffrey Rozanski. He invested $ 500 in UWTI and lost $ 100 on the sale. And then he put $ 900 on an option against the S&P 500 and made $ 55K, once again showing the YOLO spirit of the community.