Chapter 6: 21st-century media and issues
6.13.2 How a Reddit community can have an impact: A close look at r/WallStreetBets (research essay)
English 102, April 2021
During the week of January 25th, almost every post on social media that I saw was related to the GameStop stock. Seeing different tweets, Instagram posts, memes, and skits all centered around the GameStop stock instantly sparked my curiosity. I began wondering how this began, who started it, and how large the impact of this event is? Everything I looked up led me to the reddit community r/WallStreetBets. I was pretty familiar with reddit, using it in the past to look at the communities centered around my favorite television shows and musical artists. Also, in the past my friend has brought up r/WallStreetBets on a couple of occasions talking about how it was a reddit community where some people gamble a lot of their own money on the stock market. Now hearing that this reddit community was the originator behind the GameStop stock event, I was not as surprised. This idea that an online discussion forum can have such a massive influence on our world and different people’s lives is very interesting. In this case, the reading, writing, and communication done on the reddit community r/WallStreetBets has a significant impact on the economy, its members lives and the outside world.
What platform does r/WallStreetBets use and what are the key aspects of the platform?
To begin with understanding the impact r/WallStreetBets has is to first understand the platform in which most of the community does its writing, reading, and communication. This platform is known as Reddit and the academic article ”Ask Me Anything: What is Reddit?” by Katie Elson Anderson goes through the basics of it. Anderson mentions that Reddit is known for and describes themselves as the “the front page of the internet” and that if something is trending on Reddit then it definitely will be on other social media platforms soon (2). Being known as the front page of the internet and behind popular trends played a huge role in the impact r/WallStreetBets has on the outside world. Another important aspect that Anderson brings to attention is that Reddit is free to public on any device with the possibility to create as many accounts as you like (2). This being beneficial to r/WallStreetBets because there is not a pay wall behind someone trying to join the community. If there, was it would severely limit the subreddits impact and ability to discuss between its members?
Moving forward with this information, it is also important to know how Reddit began. In the same academic article ”Ask Me Anything: What is Reddit?” by Kate Elson Anderson, it touches upon the history of Reddit as well. Anderson specifies that website was a creation from the minds of Alexis Ohanian and Steve Huffman in 2005 (5). Anderson reports that it was bought by Advance Publications in 2006 and the sites’ popularity only grew from there with the with the creation of subreddits in 2008 (5). The creation of subreddits was the first domino to fail, setting the groundwork for future subreddits to follow. Specifically, r/WallStreetBets which is a product of Reddit, giving its users an option to create subreddits. Without Reddit creating this feature, their probably would be no version of r/WallStreetBets and no platform for its users to write, read, communicate, and impact the world.
Notably with Reddit and its platform comes terms and specific features that separate it from others. These terms and features are interlinked with r/WallStreetBets because this community runs on Reddit. Katie Elson Anderson’s academic article ”Ask Me Anything: What is Reddit?” sheds light on these aspects of the platform. Anderson explains how users of Reddit are called “Redditors” and posts can be anything from written text, links, videos, and photos (2). These different types of media could be seen all throughout r/WallStreetBets, with either meme videos, images, and text posts all related to stocks and whatever is trending on the subreddit. Anderson mentions how posts on subreddit can be organized by new, hot rising, and controversial (3). Anderson adds that the key factor to the post organization is how many “upvotes” a post has, and “upvotes” are a part of the post rating system. Users “upvote” when they like the post and they “downvote” for the opposite (3). Posts during the height of the GameStop stocks popularity were receiving the highest amount of “upvotes” the subreddit has ever seen.
Next, Anderson explains another term associated with Reddit known as a “subreddit”, this term is used to describe a community on Reddit (4). The term “subreddit” has been mentioned before in this research essay when describing what r/WallStreetBets is. Anderson adds that this is where the “r/” comes from, with that being in front of each of every one of the different subreddits (4). Anderson also presents data that a majority of Redditors are males that fit in the 18-29 age gap (5). This stat is especially important for knowing about who most of the members of in r/WallStreetBets are. This also gives an idea of what the users’ financial situation may be considering they are younger. Knowing the backstory, commonly used terms and features of Reddit will be very beneficial when they are brought up along with r/WallStreetBets.
What are some aspects that affect the communication done on r/WallStreetBets?
Therefore, it is time to move forward and take a look at r/WallStreetBets and the various aspects that make the subreddit what it is. The academic article titled “WallStreetBets: Positions or Ban” written by Christian J. Boylston, Beatriz E. Palacios, and Plamen T. Tassev from the Georgia Institute of Technology covers a wide basis of all the aspects connected to r/WallStreetBets. From interviews with a wide variety of members of the subreddit, to the harsh language used by its members, and even how the subreddit is organized, this article does a deep dive into what exactly is r/WallStreetBets. First, posts and user activity in the subreddit must follow a certain set of rules. Most subreddits with a somewhat decent following have rules that its users must follow. Boylston et al., make note of these rules and as of April 2020 they were “1. No Market Manipulation, 2. No Pump & Dump, Crypto Discussions, Schemes or Scams, 3. No Bullshitting, 4. Don’t Glorify Losses, 5. No Self-Promotion, Social Begging, 6. Bad Positions Screenshot, 7. Submission Guideline, 8. No Generic Memes, No Preschool Memes, 9. Political Bullshit” (39). After reading the rules it is very noticeable that the subreddit does not hold back on using expletive language. Members of the community don’t have to hold back on their communication for better or worse depending on the post. These rules listed before shape the basis behind what type of writing and communication is allowed on r/WallStreetBets.
Along with these rules it’s up to the moderators of the r/WallStreetBets to make sure the posts created and members of the subreddit follow them and act accordingly. The moderators have the direct ability to control the communication and what is read on the subreddit with them being allowed to remove others’ posts. They play a huge role into the total impact r/WallStreetBets can have on the economy because they are the ones who facilitate the discussion. In “WallStreetBets: Positions or Ban” written by Christian J. Boylston, Beatriz E. Palacios, and Plamen T. Tassev, they interview the founder of the subreddit Jaime Rogozinki. Boylston et al., note that Jamie goes on record to say that the moderators were the real ones one who made the community and that he really cannot take any of the praise (12). These moderators have such a significant impact that even the creator of the subreddit feels as those he owes them credit. Boylston et al., add that Jamie has said that most of the time when he speaks out and gives advice it’s usually what moderators want him to say (12). I can see why Jamie does this, because as the founder of r/WallStreetBets, he probably wants to stay involved even though he might not be as active as he once was. Also, in my opinion I think it’s a pretty smart on Jamie’s part on not getting too involved. This is because it could be the cause of tension between its members and him, if he were to say or do something that went against the subreddits 6.3 million members.
Who are the members of r/WallStreetBets?
In addition to talking to the founder of r/WallStreetBets, Boylston, Palacios, and Tassev also included interviews with some of the subreddits members in “WallStreetBets: Positions or Ban”. Boylston et al., were able to talk with members such as Mason who is a 24-year-old grocery store employee whose brother introduced him to the subreddit (11). The authors note that when Mason’s brother introduced him to the subreddit he characterized it as a “place where people go and lose all their money” (11). This description, all though harsh is a somewhat accurate characterization of r/WallStreetBets. There have been many stories on the subreddit of users sharing their losses of incredibly large amounts of money. This to me is very similar to how my friend described subreddit with him mentioning the fact that a lot of its member suffer huge losses with their money from these “bets”. In my opinion this is where the term “bets” comes into play with the naming of r/WallStreetBets. Another interview of a member done by Boylston et al., is their interview with Henry, a French Canadian who is in his 30’s, works in the public service sector and is an avid member of the subreddit (11). Boylston et al., include that Henry became interested in the subreddit after seeing the memes that were posted on it (11). Memes are definitely a big form and staple of the communication that takes place on r/WallStreetBets. Also, Boylston et al., mention Henry’s thoughts on the members of the subreddit and how they are all about high risk and high reward (11). This here is another member talking about how their can be some big financial risks with r/WallStreetBets and it looks as though it is a part of the community’s culture.
In short, these interviews from Boylston, Palacios, and Tassev are important for understanding who the members are, who are behind the communication in the subreddit, and how one is introduced to it. Most people find out about r/WallStreetBets through reading, writing, and communication, whether it’s word of mouth or an article they have read. For me personally, it was a friend communicating with me about this subreddit where people lose a lot of their own money. Also, these interviews made it easier to picture its members and put a face to those who might suffer a big monetary loss. With knowing who some of the members are it shows that r/WallStreetBets can and is used globally, not just in the United States.
What type of posts are made on r/WallStreetBets?\
Furthermore, with learning about the members of r/WallStreetBets it helps with the understanding of the posts and impact of the subreddit. Specifically, I want to get into some direct examples of recent posts on r/WallStreetBets. The top post of this week as of April 21st, 2021, is a post featuring an image of a chart with the overall totals related to the users gains with GameStop stock. Totals such as total gain $, total gain%, change%, among the other totals. This post was very well received by the subreddit with over 140,000 upvotes and over 13,200 comments. This specific member of the subreddit who posted their financial gains goes by u/DeepFuckingValue and posts their gains from the GameStop stock monthly to much praise from the subreddit. This post will be their final update and the earlier updates have reached upvote counts higher than 250,000 upvotes. This post has higher upvotes due to the overall hype that the subreddit and GameStop was getting back in January 2021. I know for me that when I would see these types of posts of users showing their large financial gains from the subreddit, I would be pretty amazed at how large the money they made was and jealous. Jealous that I had not taken the risk or knew about the risk before so that I could take action and invest. From the user, u/DeepFuckingValue it provides an example of how the communication done on r/WallStreetBets has a significant impact on its users and the economy.
Comparatively, I want to put some focus on the meme aspect of r/WallStreetBets. To me I associate r/WallStreetBets with more memes than I do with real financial and investing advice. The second most upvoted post as of the week of comes from a user by the name u/GenKaYY. This post is a is meme focused on the aspect of getting advice from the other members. The left side of the image features the title along the lines of who they think is giving them advice with a picture of men in professional suits below it. The right side of the meme says something along the lines of who the advice is actually from. Underneath this text features an image from Arrested Development of the Alliance of Magicians. This photo is pretty funny in my opinion because it features Gob Bluth, a main character of Arrested Development who is a magician holding a sign that says “We Demand To be Taken Seriously” with a bunch of interestingly dressed magicians behind him, such as an old man dressed as a wizard. I am a fan of Arrested Development which helps add another level of enjoyment to the meme. This meme posted by u/GenKaYY was received with much praise from the subreddit, gaining over 78,600 upvotes and over 1,200 comments. This post pokes fun at the fact that most of the communities’ members’ advice is not always the most professional and should not be taken too seriously. Both posts shown have been communication through images and text, I would say that most posts that I have seen on r/WallStreetBets have been images. This type of communication, although simple, offers a wide variety of ways to easily spread a message and get their message across.
How does the communication on r/WallStreetBets differ from other stock-related subreddits?
In addition, r/WallStreetBets is not the only subreddit that is focused on the stock market. The subreddit r/stocks offers a good comparison to the communication done on r/WallStreetBets. On r/stocks the posts are more informational based with the stock market compared to the high risk, high reward, and meme-based nature of r/WallStreetBets. The focus of r/stocks is informing new and recurring members about investing, trading, cryptocurrencies, among other aspects related to stocks as found in the wiki page of the subreddit. The top posts of r/stocks as April 21st, 2021, are all news based on recent events that has happened and is related to the stock market. The top of the week comes from u/CorneredSponge and is a post sharing the news that the shares of Coinbase open at $381 dollars, and the cryptocurrency exchange is now valued at $99.8 billion. Also, in the post it adds a link to a CNBC article that goes over the information previously mentioned. This post received over 5,800 upvotes and over 2,100 comments. This post helps give an idea of what the communication is like on another stock market related subreddit. Among the other top posts featured, there are no images or memes along with informational posts. Also, most of the posts feature sources with their posts to show their information is accurate. There is a large contrast in the r/stocks and r/WallStreetBets communication, such as most posts in r/WallStreetBets do not include sources. Not to mention that r/WallStreetBets deals with a much larger community than r/stocks. For r/stocks it is more about spreading information, sharing knowledge but for r/WallStreetBets it is all about the memes and risks related to the stock market.
How does the communication on r/WallStreetBets affect the world?
As a result, the communication done on r/WallStreetBets has an impact on the outside world and its members. This was incredibly evident during January 2021 when every major media company was covering the rising GameStop stock that was organized on r/WallStreetBets. An academic article that focuses on the effect r/WallStreetBets has on the stock market is Tim Di Muzio’s “GameStop Capitalism. Wall Street vs. The Reddit Rally (Part I).”. The focus of this article is to show the effect r/WallStreetBets had on the GameStop stock and research done on members. Di Muzio mentions the GameStop share price had grown to over 1737 percent (8). This level of growth is huge and the fact that most of the growth could be traced back to r/WallStreetBets shows that the communication does influence the economy. Di Muzio also features a heartfelt post from r/WallStreetBets by u/space-peanut (10). In the post that Di Muzio features, it is a letter written to the user’s father who was severely affected by the financial crash in 2008 (11). Di Muzio includes part of the post that now the user has invested most of their money in AMC and GameStop to get back at hedge funds (11). The hedge funds were the main target and the face of who r/WallStreetBets was going against when they were investing in GameStop stock.
As Di Muzio mentions in ““GameStop Capitalism. Wall Street vs. The Reddit Rally (Part I).” r/WallStreetBets wanted to cause some problems to the hedge funds that bet against GameStop and other falling companies (10). The communication on r/WallStreetBets is able to affect hedge funds and able to help its users who have struggled financially in the past like u/space-peanut. Di Muzio also features a statement from billionaire, Mark Cuban and he says that he is amazed at the efforts of r/WallStreetBets with them taking on wall street and that their future endeavors will be even better (13). Even billionaires are aware of the community and the impact they have on the stock market, most likely affect them in the process as well. In my opinion it was pretty big that Mark Cuban took notice of r/WallStreetBets and supported the community.
Furthermore, another academic article that focuses on how the communication done r/WallStreetBets has an effect is “Reddit’s Self-Organised Bull Runs.” by Valentina Semenova and Julian Winkler. Semenova and Winkler bring up how most users get interested in specific investments through the posts of others showing their financial gains from a specific stock (8). Seeing other people’s successful financial posts creates a domino effect of other members wanting to see the same result. Leading them to invest in specific stocks just from the communication on r/WallStreetBets. Semenova and Winkler call this a type of contagion and that a chain reaction of positive posts will only lead to more investments in a stock (12). Semenova and Winkler in this academic article do studies on the outreach of posts and the spread of information on the subreddit (13). Specifically, Semenova and Winkler show that after the price of the S&P 500 stock dropped by 24.1%, posts about the S&P 500 increased drastically and was talked about more than any other stock (18). With these frequent posts on the subreddit related to a certain stock it will lead to them convincing others to either sell or buy more of it. For me I know that if I saw a large number of posts related to something good or bad happening to a stock, I had interest in I probably would take action immediately.
To emphasize r/WallStreetBets effect on hedge funds during the GameStop stock investments is Zachary Feinstein’s academic article titled “Clearing prices under margin calls and the short squeeze.”. The focus of this academic article is all about how r/WallStreetBets investments in GameStop and AMC affected hedge funds. Feinstein mentions that with r/WallStreetBets investments in GameStop stock it raised the price of stock which would negatively affect big hedge funds (1). Hedge funds were going to take big losses because they were originally betting that the GameStop stock would fall as noted by Feinstein (2). Posts on the r/WallStreetBets subreddit hyping up the GameStop stock directly led to hedge funds suffering large financial losses. Feinstein adds that the price of shares in GameStop went from $17 a share to $340 a share after r/WallStreetBets involvement (8). Also, Feinstein adds how the price of shares of AMC stock went from $2.33 to $18.90 from the hype surrounding it (8). These huge jumps in share price will massively affect those hedge funds that bet against these dying companies. Showing how the communication and posts on the r/WallStreetBets subreddit can affect the hedge funds and the stock market. For me, I am glad that r/WallStreetBets was able to positively affect these dying companies from the pandemic that the high ups in wall street were going to bet against.
How did the media cover r/WallStreetBets rise in popularity?
Notably with the significant impact that came from GameStop stock rising and hype that was surrounded with r/WallStreetBets, it is important to look at how this affected the media. Online news outlets, for example, were really interested in this story. Providing many articles detailing the newest updates about the GameStop stock and r/WallStreetBets. One of these articles comes from The Verge titled “How R/WallStreetBets Gamed the Stock of GameStop.” and written by Elizabeth Lopatto, published on Jan 27, 2021. This article gives the background behind why the GameStop stock was rising and its connection to r/WallStreetBets. Lopatto features data that says that those who were trying to bet against GameStop have lost somewhere around $5 billion dollars. Among many other details Lopatto includes surrounding the GameStop stock, r/WallStreetBets, information on how much money is involved, Lopatto also includes a tweet from Elon Musk, CEO of Tesla, and SpaceX. This tweet from Musk reads “Gamestonk!!” with a link to r/WallStreetBets attached below it. This shows that the communication from r/WallStreetBets has positively affected another billionaire. Another example of an article that was written because of the effect r/WallStreetBets has had is from Yahoo! News. This article is titled “Reddit’s WallStreetBets Is Facing a Culture Divide as New Users Flood the Forum.” and is written by Steven Asarch, published on February 8, 2021. Asarch goes over in the articles how since r/WallStreetBets popularity there is now new issues they have to deal with. Asarch adds that even some of the subreddits most popular members are being investigated. This article is the result of the communication on r/WallStreetBets having an impact on the media and outside world.
In conclusion, the writing, reading, and communication done on r/WallStreetBets has a significant impact on the economy, its members lives and the outside world. The members of this subreddit were able to go against high ups on Wall Street and make money doing it all through the communication done amongst themselves. I think that r/WallStreetBets shows that a message board or communication online can have real world effects. This does bring up the question that should these types of communication be regulated based on the overall effect and impact r/WallStreetBets has. Overall, through the research it shows that the members of this subreddit are real people who have been impacted by their community. From stories to huge losses to incredibly large financial gains, r/WallStreetBets is the center of all things irresponsible investing on the internet.
Anderson, Katie Elson. “Ask me anything: what is Reddit?” Library Hi Tech News, vol 35, no. 5, 2015, https://doi.org/10.7282/T3D220BR. Accessed 28 Mar 2021.
Asarch, Steven. “Reddit’s WallStreetBets Is Facing a Culture Divide as New Users Flood the Forum.” Insider, Insider, 8 Feb 2021, www.insider.com/wallstreetbets-reddit-forum-divided-as-new-users-flood-subreddit-2021-2. Accessed 29 Mar 2021.
Boylston, Christian, et al. “WallStreetBets: Positions or Ban.” arXiv preprint arXiv:2101.12110, 28 Jan 2021, https://arxiv.org/abs/2101.12110. Accessed 28 Mar 2021.
CorneredSponge. “Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.” Reddit, 14 April 2021, https://www.reddit.com/r/stocks/comments/mqvlms/coinbase_sh ares_open_at_381_on_nasdaq_valuing/ Accessed 21 April 2021.
DeepFuckingValue. “GME YOLO update — Apr 16 2021 — final update.” Reddit, April 16, 2021, https://www.reddit.com/r/wallstreetbets/comments/msblc3/gme_yolo_update_apr_16_2021_final_update/ Accessed 21 April 2021.
Di Muzio, Tim. “GameStop Capitalism. Wall Street vs. The Reddit Rally (Part I).” The Bichler and Nitzan Archives, 11 Feb 2021, http://bnarchives.yorku.ca/673/. Accessed 28 Mar 2021.
GenKaYY. “Tbh I only trust retards.” Reddit, April 17, 2021, https://www.reddit.com/r/wallstreetbets/comments/msv8n1/tbh_i_only_trust_retards/Accessed 21 April 2021.
Feinstein, Zachary. “Clearing prices under margin calls and the short squeeze.” arXiv preprint arXiv:2102.02176, 3 Feb 2021, https://arxiv.org/abs/2102.02176. Accessed 28 Mar 2021.
Lopatto, Elizabeth. “How r/WallStreetBets Gamed the Stock of GameStop.” The Verge, 27 Jan 2021, www.theverge.com/22251427/reddit-gamestop-stock-short-w wallstreetbets-robinhood-wall-street. Accessed 29 Mar 2021.
Semenova, Valentina, and Julian Winkler. “Reddit’s Self- Organized Bull Runs.” Munich Personal RePEc Archive, 105630, 20 January 2021, https://mpra.ub.uni-muenchen.de/105630/. Accessed 28 Mar 2021.