Since the unprecedented surge in GameStop stock prices on January 28th, the now-famous subreddit r/WallStreetBets has been compared to David taking down a hedge fund Goliath. The analogy is understandable. WallStreetBets is an open, online forum, primarily used by amateur stock traders. Hedge funds are closed groups of professional, incredibly wealthy traders that represent large corporations and big-shot investors. It’s a classic story of the big guy versus the little guy. However, in the classic story of David and Goliath, David has previous experience taking down beasts and his act is one of resolute selflessness. The same cannot be said for WallStreetBets.
To briefly explain the situation, WallStreetBets (WSB), the aforementioned group of Reddit users, got word that large hedge funds were shorting GameStop stock. Shorting is a stock trading strategy wherein someone borrows stocks from a broker, sells them for a high price, buys them back at a lower price, and pockets the difference as they return the stocks to their original owner. When the hedge funds saw that GameStop had been losing money over the last year, they decided to sell their shares of stock because they thought the stock price would keep going down. From there, they planned to buy back their stock at a lower price and make a profit.
All was going well for the hedge funds until a subreddit of amateur stock traders heard what was going on and realized that if they joined forces and bought up the stock, the demand for and subsequently the price of the shares would shoot up. Since the hedge funds bet on the stock prices going down, the price surge would put them in a bad position; they would have to buy their stocks back at a loss in order to return them to their original owners.
The moment the hedge funds bought their stock back was the “big squeeze” WSB had been waiting for. Prices of GameStop stock hit an all-time high and WSB sold the shares they had purchased, pocketing the money of Wall Street billionaires to do things like pay off loans, buy necessities, and have a little financial wiggle room.
Hypothetically, this is a wonderful and admirable idea: regular, working-class people uniting to take down the greedy and powerful “big man.” However, returning to the David analogy reveals the two main reasons that this story didn’t end in an underdog victory.
In the story of David and Goliath, the hero, David, mentions he’s killed both lions and bears in the past. Because of this, he trusts he will be able defeat the beast-like Goliath. When we translate this prerequisite to WallStreetBets, it’s unclear if the group was collectively informed enough to beat their hedge fund opponent.
To be fair, many of the subreddit’s original members know a substantial amount about the market and are the reason GameStop stock (GME) even took off in the first place. For example, WSB royalty Keith Gill, more commonly known as u/deepfuckingvalue, is a financial analyst and investor who has made millions off of GameStop. At its peak, his profile was worth 33 millions dollars. However, Gill represents the minority of WSB in more ways than one.
Gill is both an “old timer,” meaning he isn’t one of the 7.5 million people who have joined the subreddit in the last 30 days, and a professional trader. That isn’t to say that only seasoned professionals can be successful on WSB, but rather to suggest that Gill is someone the group looks up to. He’s treated as a hero, and whatever he does is followed by the rest of the group. It feels appropriate to call Gill a WSB leader, which begs the question: what types of people are his followers?
While the exact demographic of the WallStreetBets group is unclear, Reddit’s user base is about 70% male and is mainly comprised of individuals ages 18 to 29. In addition to posting on Reddit, WSB communicates through the popular gamer messaging platform Discord. With all of this in mind, it seems fair to suggest that a video-gaming, young-adult man is the average member of the group. This would explain the often profane, gamer-bro rhetoric used within the group, which is one of its most defining attributes.
Best categorized as “meme language,” WallStreetBets’ choice phrases are random to outsiders but humorous to the in-group that frequently employs them. The subreddit doesn’t take itself or anything seriously and because of this, many of the group’s catchphrases are forceful, rude, and politically incorrect.
WallStreetBets threads are dominated by members telling each other when to buy and when to sell without any clear explanation of why it is important to do so. This is reflected in trending phrases like “Hold!” (don’t sell your stocks), “Diamond hands” (another way to encourage holding), and “To the moon” (buying stock and raising its price). Moreover, when actual explanations do surface, they are often riddled with WSB slang and require a strong base-knowledge of stocks to understand. All this is to say although it is possible to learn from WSB, the group’s rhetoric generally mimics that of commanders to soldiers, not teachers to students.
Regardless of the individual members’ knowledge and experience, by collectively following and repeating trending commands, the group operates, wins, and fails as a herd. When we take into account the group’s simple, commanding language and their massive amount of brand-new, bandwagoning members, it feels fair to suggest the group was not collectively informed enough to successfully take down the hedge funds they were up against.
However, knowledge level is the smaller of the two hindrances WallStreetBets faced. David’s defeat of Goliath was a massive triumph because he acted out of selfless dedication to his community. WallStreetBets members seem more dedicated to their own jokes and making a quick buck than they are to any actual cause.
If WallStreetBets had banded together under a shared goal like undermining capitalist injustices or supporting a promising company, they might still have a fighting chance against the big men on Wall Street. In reality, most members seemed to invest with the goal of “going to the moon” and getting rich. This sentiment has been supported by the founder of WSB, Jaime Rogozinski, who suggested in an interview with Forbes, “By the time WallStreetBets reached 1 million users last year, the community had come to love and covet two things above all else: it wanted to make money, and it didn’t want to play by any set of established rules.”
I agree with Rogozinski—however, I suggest that right alongside money (and rule-breaking), the members of WSB have always been dedicated to their collective. They are dedicated to the memes they are all in on, the group wins and failures, and the principle of not taking things seriously. They often reiterate that they are stronger together, and nobody wants to be the one to let down the team. Even on February 1st, a day when GME stocks tumbled 30%, members were still telling each other to hold, buy the dip, and stand strong.
Over the past few weeks, as GME, AMC, and other WSB choice-stocks have plummeted, there was never a massive call telling members to sell. Surely many of them did sell; they were the people buying up and trading these stocks in the first place. However, putting money and WSB in opposition revealed that members would rather appear loyal to the group than admit to selling. They would rather brush off their losses in a string of “YOLO” posts than admit they’d been failed by the group’s commands. Split loyalties and a lack of honest communication resulted in everyone losing.
Wall Street’s top hedge funds are definitely Goliath. They are big, powerful, blundering, and mean. They are a common enemy of the people, and they need to be taken down. This half of the analogy was correct. However, I think a real issue was created the moment the media and the public decided to cast WallStreetBets as David.
Desperate to create a dramatic little-guy-beats-big-man narrative, they shoved a group of joking, uncommitted gamer boys into a role they didn’t fit in the slightest. They cast a group better fit to play the trouble-making side character as their hero.
I think WallStreetBets would agree that in the last month they have been misrepresented as far more political and serious than they actually are. They are not a team of radicals here to subvert the economic hierarchy; they never said they were. They’ve always been a group of amateur traders and gamers looking to share in something fun. To quote their own slogan, they are “like 4chan found a Bloomberg terminal.”
If Wall Street is worried about competition, they shouldn’t be. At least not from WallStreetBets. Hedge funds were the butt of the group’s money-making antics and now that the joke is no longer funny, they should, at least for a little while, be left alone. They can regain their gobs of wealth as WallStreetBets retreats back into their random, vulgar corner of the internet, laughing about the moment they found themselves in the spotlight.
By Jill Risberg
Illustration by Kaylina Kodlick