(Part 3/ 3 on the topic)
(In the last two parts of the three-part series, we got to know about niche and niche communities plus Influencers. This part is about a demonstrated case of Influencers influencing the stock markets.)
WallStreetBets: A textbook case of Influencers’ Influence
The subreddit WallStreetBets(WSB) was not born with a silver spoon in its mouth. Jaime Rogozinski, when he created the group, only wanted to commence “a community, a place for people to talk about high-risk trades in an unapologetic way for people to make some short term money with disposable income.”
As years progressed, the subreddit remained niche and small and nondescript. Counting all the way from 2012, it took WSB 5 years to cross the threshold of 100,000 subscribers. By the year 2020, WSB had 1 million subscribers. Novice traders used the platform to share their gains, losses and yes, memes.
By the time it was June 2020, the subreddit had many more Influencers. User ETHBAGHOLDER fielded the claim that they were able to turn $3k to $102k in 2 weeks taking the advice from the sub. And then there were many other Influencers coming out with the same type of claims. Suddenly it was as if a buzz was afoot at a 120-decibel range; and the community had grown to 1.8 million subscribers by December 2020. Then things began to have their own life, to put it mildly.
GameStop, a video game retailer was about to become a sure-fire failure. Obviously, or so it was thought, it would go the Blockbuster way (the very same Blockbuster which had turned down the offer to acquire Netflix). But over the six months running to January 2021, the price of GameStop shares had gained 8000% in value! There was a terrific short position piled against GameSstop by the Goliaths of stock market players.
“GameStop was one of the most shorted of all publicly traded companies. Other companies on the list include AMC Theatres, Bed Bath & Beyond and even the mostly defunct Blockbuster,” a report said. To cut the long ‘short’ story short, the chatter on the Internet was enough for the invigoration of newly found interest on the stock, which led to buying after buying pushing up the price of the stock which triggered more of buying and thus initiating a bull rally in the stock. In January alone, short sellers lost $23.6 billion on GameStop. After three people were added to its board of directors, one of them an activist investor, GameStop had many short positions abandoned. This added to the power of WSB chatter.
Eventually, the word got out into the mainstream and from trading at around $43 to as much as $380 creating new millionaires in the wild rally wake, GameStop story even had a stopover at The White House and at the Congress. Reddit co-founder Alexis Ohanian, on the phenomenal surge, tweeted, “the public doing what they feel has been done to them by institutions.”
This is a clear demonstration of the power of Influencers heralding change.
(PART 2/ 3) (TOPIC ENDS)