What's going on with r/wallstreetbets and GameSpot stock?

Answer: WallStreetBets is an online community where people post discussions and memes about stocks, however it has become very large and a place of interest when there's a lot of hype about a stock. It's worth noting that there have been hyped stocks there that did not take off, but people only remember the few that have, like TSLA (Tesla) and PLTR (Palantir)

GameSpot, for a number of reasons, drew a lot of interest there, and one user in particular made a ton with an early investment (like a year ago). GameSpot is not only under new management and partnerships but it has also been massively "shorted" (people betting against the stock rising), and there was a lot of hype over the course of last week that it will take off in a short squeeze. There were also a lot of people saying the opposite.

The joke was that if enough people buy shares then the massive firms who have shorted the stock will have to also buy more shares cover their losses, further increasing the stock's value in a sort of a feedback loop. It was a meme that the retail investors would be the ones walking away with most of the money, the firms who have shorted it having lost a lot of money. Thus a lot of people posted things like "if everyone buys and doesn't sell we will be rich".

It has also garnered attention from news outlets who started treating the subreddit as a unified community. In fact, I believe it is just memes and hype on what is driven by the technical factors and fundamentals. Yes, there is a lot of hype and retail/day traders buying stocks, but most of them are not even on Reddit. However, the fun narrative is that WSB defeated large firms.

Once it did take off, there was a LOT of hype in the subreddit about it, and they attracted a lot of new members. I believe it is around 3 million over the last week or two. Even the discord was even getting 6k+ new people a day.

News has tended to report on it as if the subreddit is somehow responsible - maybe it is partially responsible for getting it trending on Twitter and elsewhere and has spurned a lot of retail interest (and there's more retail/day traders than ever, due to apps like Robinhood making it easy), but I believe the characterization is just because it makes a good headline.

There are other large firms that are equally piling on to the short squeeze and it is not due to that one subreddit hyping it up and saying it will go to $1000, and probably not mostly because of day traders in general since they represent a small fraction of the stock market. However, there has been an unprecedented level of activity from day traders on the stock.

I may be off on some of this so hopefully all the other answers will help fill in anything I should have mentioned.

/r/OutOfTheLoop Thread