Reddit is the ‘front page of the Internet’ but does it also dictate the prices of shares on Wall Street?
The answer may not be ‘no,’ as a recent subreddit r/WallStreetBets led to a surge in American videogame company GameStop’s shares soaring over 400% this week, after aggressive touting of GameStop’s stock by several of its members.
But it didn’t end there, in fact – that’s where the chaos started, as the Reddit message board that was breaking the internet by sending Wall Street into a frenzy was briefly taken private by its moderators on Wednesday, adding further confusion to a wild day.
“We are experiencing technical difficulties based on unprecedented scale as a result of the newfound interest,” said a message on the WallStreetBets subreddit, adding that enforcement of the forum’s rules and Reddit’s content policy became increasingly difficult. “WSB will be back,” the moderators added.
The soar in GameStock was the result of actions that appear to have helped fuel a so-called short squeeze in GameStop (GME) stock, where investors who had used options to bet against the stock needed to cover those bets by buying shares.
In the brief pause when the subreddit went private, Reddit’s social media accounts including Instagram were spammed with comments demanding for it to be restored.
Reddit told CNN Business that the moderators of WallStreetBets chose to take the forum private, and the company was not involved in the decision.
However, after briefly being private, the subreddit was then back up, reports CNBC.
A mega-thread on it going private has also been pinned to the top of the sub-reddit.
WallStreetBets has since turned its attention to other stocks, with movie theater chain AMC (AMC) spiking more than 300% on Wednesday.
In a post soon after making WallStreetBets public again Wednesday evening, the moderators outlined their struggle to manage the group’s surging popularity.
“We have grown to the kind of size we only dreamed of in the time it takes to get a bad nights sleep,” they said. “We’ve got so many comments and submissions that we can’t possibly even read them all, let alone act on them as moderators.”
While it was private, a subreddit called WallStreetBetsnew, meanwhile, gained more than 100,000 followers in around 30 minutes on Wednesday evening. That subreddit was established in March last year. On it, users urged their peers not to panic. Others encouraged buying even more stocks in revenge for the outage.
(With inputs from CNN)