r/wallstreetbets was established in 2010 as a subreddit, or subcategory, of the Reddit forum. Jaime Rogozinski, who founded the group, aimed to create a community of people who shared his enthusiasm for high-risk investments.
In fact, Rogozinski says that one thing that inspired him to create r/wallstreetbets was because followers would say his investing style was similar to gambling.
But up until 2020, the group was primarily an internet outlier. In reality, the group didn’t hit 100,000 subscribers until 2017. However, a variety of variables came together in 2020 to propel the group to its current subscriber base of over 5 million.
First off, the Covid-19 outbreak left many would-be dealers with spare time and little options for pleasure. When stimulus money became available, these investors could use it as “seed money” to make risky market bets.
Additionally, these investors have access to trading applications like Webull and Robinhood, which provide commission-free trading.
For r/wallstreetbets, the circumstances were genuinely ideal.
It’s beneficial to comprehend the idea of short selling if you’re unfamiliar with the r/wallstreetbets phenomenon. The practise of short selling is prevalent in the world of investments. A trader sells an asset they do not own in a short sale. In more detail, an investor borrows an asset and commits to buying it back at a later period and returning it to the asset’s owner.
In a short sale, the investor anticipates that the asset they are borrowing will lose value. This means that by selling their shares—which they do not own—at a higher price and then buying them back at a reduced price, the investors can profit.
Due to the use of margin, short selling is one of the riskiest types of investment. This is due to the almost limitless possibility of loss. Nevertheless, short selling is a common practise among hedge firms. And this is where r/wallstreetbets comes into the picture.
The final line is that organisations like r/wallstreetbets may not suit your investing style, but they will undoubtedly continue to upset the market for some time.