We are now barreling into our third week of financial meme hell. Video game retailer GameStop’s stock rose over 1,000 percent after it was championed by the r/WallStreetBets subreddit. The stock fell 30 percent on Monday, however, leading many to believe a crash may be imminent.
What started as a half-serious Reddit campaign to rally around GameStop has ballooned into something much larger. Is this Occupy Wall Street 2? Or is this a second Gamergate? Are the Redditors that are leading the movement right now populist heroes? Or is this, as Elizabeth Warren has suggested, just a psychotic Internet casino that is tearing the fabric of society apart?
What can’t be denied is that a Reddit community was able to harness its scale to bend the market to its will. That’s a genie you can’t put back in the bottle.
r/WallStreetBets is a 7 million-strong subreddit for stock traders. It was created in 2012 by a banking technology consultant named Jaime Rogozinski. Its users—who commonly refer to themselves as “retarded degenerates”—bond over edgy memes, insane bets, idiotic financial trolling, and sharing what they call “loss porn”—screenshots of their tremendous losses. To get a sense of where the community’s values lie, Martin Shkreli—the former hedge fund manager who became a target for public hatred when, as CEO of a pharmaceutical company, he jacked up the price of a lifesaving drug by 5,000 percent, and was later convicted of fraud—was a frequent contributor. In a 2017 thread, a user asked the subreddit why they loved Shkreli so much.
“r/wallstreetbets is a community that celebrates making risky plays in the stock market (aka YOLOs) while being unabashedly pro-capitalist and lacking any sort of moral scruples. Shkreli, who’s considered the embodiment of wall street greed, thus makes for an excellent idol,” a user named cuminme69420 replied.
Members of r/WallStreetBets have been “going long,” or “YOLOing,” on GameStop stock for over a year now. According to r/WallStreetBets users, the struggling retailer was simply undervalued by Wall Street. The chain is also a long-standing fixation for Internet communities like 4chan and Reddit. There’s an entire genre of 4chan post about GameStop.
The fact that the retailer is operating physical stores amid a pandemic and that its business relies on selling video games, which can easily be undercut by companies like Amazon, made it a target for short sellers. By borrowing shares to sell now—and buying them later to repay the loan after a stock’s price has fallen—short sellers can make a tidy profit. The problem is that prices may rise, and if, for example, a stock borrowed and sold at $10 a share in hopes that it will fall to $5—which would double the short seller’s investment—rises instread, the borrowed shares still must be paid back, meaning that losses for traders caught in this “short squeeze” could be limitless. The Wall Street Journal reported Sunday that Melvin Capital, one of the huge hedge funds that was shorting GameStop, saw a 53 percent loss on its investments in January.
The subreddit’s first big target was investment analysis firm Citron Research. According to Andrew Left, the firm’s founder, redditors attempted to hack into his Twitter account, disrupted company livestreams, and made threats of physical violence against him and his family. He announced last week that Citron Research would no longer be publishing short -selling reports.
It’s this two-pronged attack that makes what r/WallStreetBets is doing right now so unique. It is collectively “pumping”—boosting the share price—of stocks shorted by hedge funds, while also waging an information war. 4chan and Reddit pursued a similar strategy in 2016 in support of the Trump presidential campaign. These communities decentralized a political movement, rebuilding it to function better on huge social platforms like Facebook, Twitter, and YouTube. What is happening around GameStop right now, however, is the first time this viral reality bending has been applied to something like the financial world at this scale. The GameStop pump, like Trumpism, QAnon, or Gamergate, is also a meme first and a political movement second. And ideologies born from the Internet evolve like any other kind of Internet content.
The subreddit gained 2 million subscribers as the battle with Citron Research attracted attention. By early last week, the subreddit was going down regularly, struggling to handle the amount of traffic it was getting. It also inspired a wave of conspiracy theories about whether Reddit was trying to censor the community, which, by that point, had constructed a manifesto of sorts.
“These funds can manipulate the market via your network and if they screw up big because they don’t even know the basics of portfolio risk 101 and using position sizing, they just get a bailout from their billionaire friends at Citadel,” a user named RADIO02118 wrote last Monday. “Seriously. Motherfuck these people. I sincerely hope they suffer. We want to see the loss porn.”
r/WallStreetBets users have also threatened to kill reporters and Jews. Last week, the subreddit’s main Discord server was shut down because of out-of-control racism and paranoid conspiracy theories. Users declare love for Pepe the Frog, throw slurs around, and idolize Elon Musk. Though there are wholesome dimensions to this. DeepFuckingValue, a Reddit user named Keith Gill who had been one of the diehards going long on GameStop, is a 34-year-old dad from Boston who just loved talking about stocks on the Internet. But the architects of the Trumpian culture war like Steve Bannon have so successfully appropriated “meme culture” that most content that appears in normal Internet forums for young men now is indistinguishable from what you would see in a Proud Boys Telegram group.
While it can be hard to fully articulate what r/WallStreetBets stands for—and this will continue to change—what is clear is that r/WallStreetBets decided to move the market in a particular way and then did so. This is both an objectively terrifying and thrilling idea. There is a visible queasiness on the part of CNBC anchors and market experts dissecting all of this on air.
Though the GameStop pump has already reached critical mass, we are at the stage in the meme cycle where there are too many mysterious obelisks appearing to keep track of and every new one looks worse. Following the main Discord server’s going offline, numerous breakaway servers appeared, organizing stranger and weirder financial campaigns, like buying stock in AMC or Blockbuster (two other firms whose struggles in the real world would frighten off rational investors) or inflating the value of the dogecoin, a joke cryptocurrency that, up until last Thursday’s 800 percent spike, was virtually worthless. Its value dropped almost 50 percent over the weekend.
We’re also now seeing the trading platforms that prop up this world beginning to buckle under the pump’s momentum. Robinhood, one of the most popular stock trading apps in America, suddenly, last Thursday, froze all buying of a number of Reddit-targeted stocks. This is not dissimilar to Facebook’s attempts at last-minute moderation to stop the carnage inside the Capitol. There is now a raft of conspiracy theories about why Robinhood intervened. It is not difficult to imagine how this could develop into a financial equivalent of QAnon.
Things will probably get weirder. r/WallStreetBets connected virality and commerce more directly than ever before. The chaotic whims of the Internet can now directly be translated into money. And like every new trick an online community learns, meme pumping will most likely be used for fun as much as it will be for terror. And the next wave may not even involve finance.
Every sector of our society is being remade in the image of the web—our media, our democracies, and now our financial institutions. Most of the digital populist uprisings we’ve seen around the world resulted in destruction, death, and weaker democracies, though. So, yes, r/WallStreetBets could, as some cheerleaders on both sides of the political spectrum have argued, finally make the market more fair and egalitarian. But it seems more likely to be the harbinger of waves of speculation bubbles that constantly destabilize the market.
If all it takes is a few million Internet users to upend the stock market, then what’s stopping other communities from organizing their own financial assaults? For instance, before Parler went offline, it had over 23 million users. That’s three times as many users as there are on r/WallStreetBets right now. Some of those users already tried to storm the Capitol. What could a group like that do to the market?