Everything you need to know about r/wallstreetbets and the GameStop frenzy

Written by Roshan Sharma

Many people are curious to how a group of amateur traders, namely r/wallstreetbets, have managed to massively disrupt the stock market. In this article, we will break down who they are and what their purpose is, as well as an explanation of their risky trading tactics.

Who are they and what’s their aim?

r/wallstreetbets is a trading forum on Reddit with 9.1 million members that aims to bankrupt hedge fund managers by using a (highly effective) tactic that they have created, swarm trading.



Shown above: Stonks, used by Redditors to signify growth or profit

What is Swarm Trading?

Swarm trading is a high-risk, high-return strategy where these mad day traders work together to rally a little-known firm’s price. This causes hedge funds that have bet on the price falling and shorted the stock, to lose millions or even billions of dollars. This also caused trouble for online brokers, especially Robinhood. Robinhood has come under fire for restricting the amount of shares that users could buy in GameStop and AMC after they experienced a Reddit-user-fuelled spike. Robinhood was accused of protecting hedge funds that had shorted these stocks and lost a lot of cash. It was also forced to raise $3.4b in collateral for the DTCC, the body responsible for protecting investors and the markets.

The GameStop, AMC Entertainment and BlackBerry Frenzies

These three stocks all exploded following a swarm of Redditors rallying these firms. Investors around the world were dumbstruck by the sheer scale of GameStop’s spike. It was up 2,265% in the space of 15 days. These spikes all proved the effectiveness of swarm trading. Could this be the beginning of a new era on Wall Street? Could hedge funds feel under threat from amateur traders as social media and stocks collide?