While Reddit prepares for an IPO, we wanted to check in on the investment forum that sparked the meme stock craze of 2021.
Last year’s meme stock craze kept plenty of amateur investors busy at home, and you can thank WallStreetBets for most of that.
For the uninitiated, WallStreetBets is a popular subreddit where retail traders freely discuss stock and option investments. The group was founded in 2012 by Jaime Rogozinski, who has since been removed from the platform by Reddit administrators. WallStreetBets will turn a decade old on Jan. 31 with roughly 11.5 million followers to date.
WallStreetBets is known for its boldness and sarcasm all around, even on Twitter. But the group’s comical approach to discussing investments shouldn’t be a laughing stock.
Meme stocks are stocks that gain popularity among retail investors through online forums and social media platforms. If you’ve ever come across WallStreetBets, you’d know the group is known for prompting those. One of WallStreetBets’ most significant claims to fame includes its role in the Gamestop short squeeze a year ago. When the group learned about hedge fund short sellers in GameStop, it reported the scoop on Reddit. This prompted young investors to invest in GameStop stock, which drove the price up by 134% at one point, CNN reported.
Amateur investors have often driven up the prices for cheap or neglected stocks, but this move showed how strong WallStreetBets’ influence really is. Retail investors also made it a point to show that they actually have the power to shake the stock market because they are fearless in their investment tactics. (Some discuss them in open forums, for crying out loud.)
So, what’s been up with the investment forum lately?
Trading volume was down in the second half of 2021, and so was chatter on WallStreetBets. Will the forum rebound?
For starters, WallStreetBets is running a predictions tournament this month, where its members can cast votes about stock-related topics, like how well Peloton, Tesla, and Microsoft stocks will look at the end of January.
Stock chatter is also back up on the platform this week.
SoFi became the most-mentioned stock ever on the platform earlier this week after the online personal finance company announced that it got approval from the Federal Reserve and the Office of the Comptroller of the Currency to set up a bank. Retail traders helped drive the fintech’s stock up by 20% when the Nasdaq opened on Wednesday.
Discussion in the group has also recently focused on Netflix, Peloton, Tesla, and, surprise surprise, GameStop, according to Swaggy Stocks which tracks WallStreetBets’ activity. This week, Netflix stock took a major plummet, dropping by around 20% — the worst dip the platform has seen since July 2012. This happened after the streaming platform announced that competition had stifled its growth.
Could WallStreetBets revive these stock prices? Maybe, but the forum is known for prompting unpredictable moves, so we’ll have to wait and see.
In other news, Reddit officially filed for an IPO in December 2021. Earlier this month, the social media platform announced that it hired Morgan Stanley and Goldman Sachs to support it through the IPO process. Reddit users have widely shared their concerns about censorship on the platform if it goes public and taking to Twitter to joke about the possibilities.
Some news outlets even sparked an idea that WallStreetBets could prompt young investors to do to Reddit what they did to GameStop once the platform goes public. It’ll be interesting to see what happens to WallStreetBets as Reddit’s IPO comes to fruition. We’ll be watching closely.