What is r/wallstreetbets? We Explain Here

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.

What Are Meme Stocks? We Explain Here

Meme stock craze, which began at the height of the coronavirus outbreak, has beaten institutional investors by organising retail day traders on social media to boost the price of businesses that Wall Street is betting against.

The stock price of struggling video game retailer GameStop was rocketed by this new breed of traders, who congregated on websites like Reddit’s well-known WallStreetBets forum and used commission-free trading applications like Robinhood.

By the end of January 2021, shares had risen from $3 in 2020 to over $300, triggering historic market volatility and significant losses for hedge funds that shorted stocks.

Borrowing a stock through a broker in the hopes that the price would fall is known as short selling. When it happens, the buyer returns it and makes money on the price differential between the first and second, lower prices.

It relies on the timing of what you bought and sold, just like with any investment. Individual investors made significant profits in GameStop, but those who currently own it would be making a loss.

Describe A Meme Stock

A stock that gains popularity among individual investors as a result of social media is known as a meme stock.

On a social media platform like WallStreetBets, a group of day traders choose a company and work together with members of their online community to buy shares to raise its price with the objective of selling it before it declines.

Typically, they go for businesses that Wall Street has gambled against. Typically, the success of the company has minimal bearing on the increase in stock price.