Business

What Has Been the Fallout From r/wallstreetbets?

Founded in January 2012, r/wallstreetbets, more commonly known as WallStreetBets or WSB, is a subreddit specialising in stock and option trading.

Participants can discuss the latest strategies and some of the language used is often loud and brash. Thanks to the methods used by the people on WallStreetBets, their method of trading is aggressive and many onlookers believe it is a form of gambling rather than trading.

WSB came to the attention of the world in January 2021 when the users of the subreddit initiated a short squeeze on GameStop and this led to a significant rise in the stock prices of the company. GameStop is a United States based bricks-and-mortar video game retailer, similar to Game in the United Kingdom and the retailer was struggling. At the beginning of 2021, GameStop was valued at $17.25 (£12) a share but this soon increased dramatically to $483 (£345) in the space of only three weeks.

If you are based in the United Kingdom and like the idea of trading, you can find a whole host of uk stock trading app to explore this booming sector with, but It is best to avoid situations like the one surrounding GameStop but there are plenty of great trading apps which allow you to trade safely and will guide you all the way.

Thanks to the GameStop fiasco, shares in Reddit doubled in value and this was just one of the fallouts from r/wallstreetbets. The number of subscribers on the subreddit rocketed, with over 2.4 million new subscribers in the space of a week of the GameStop short squeeze. It took 9 years for the r/wallstreetbets to reach just over 2 million users but as of April 2021, the subreddit had close to 10 million followers. So, in terms of the popularity of the WallStreetBets, the GameStop incident only increased the interest in the subreddit.

However, the fallout spread to other sections of the online trading world. As a result of the GameStop squeeze, restrictions were placed on the trade of heavily shorted stock at Robinhood, TD Ameritrade, E-Trade, and Webull. Some members of WallStreetBets were unhappy with this reaction, especially with RobinHood and the community forced the star rating of the RobinHood application on Google Play and other app stores to drop to one star by the end of January 2021. In addition, class-action lawsuits have been filed against RobinHood for the restrictions placed on trading and this is something that is ongoing.

There is a Twitter account that has been setup specifically to build an active case against Robinhood for market manipulation and price fixing. The account has over 7,000 followers at the time of writing. However, the complexity of the cases being brought against RobinHood means it could go on for years until anything is resolved.

Placing a limit on some stocks and buying activity is a huge decision and something that took many people by surprise, even those deeply involved, such as Viktor Nebehaj, the cofounder of Freetrade. Shortly after speaking to Sky News and saying they would never place a limit; he received a message saying that is exactly what they were going to do.

Hedge fund managers will be looking back on what happened and perhaps for the first time in many years, they will be concerned about the influence of outsiders and what the ‘little guy’ can do.

 



Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
%d bloggers like this: