WallStreetBets Against Wall Street: The Role of Reddit in the GameStop Short Squeeze

Self-induced consensus of Reddit users to characterise the GameStop short squeeze

“…Lucchini et al 25 measure the growing user commitment to the GME operation and social identity of WSB participants, describing the key role of a committed minority of users in triggering the collective action. Anand and Patak 19 go along the same line showing that it was a tiny minority of 462 most influential subredditors whose posts most impacted the GME stock price. Although a proper theoretical framework is still lacking, this empirical evidence suggests that a fundamental understanding of the GME case study requires an endogenous self-reinforcing mechanism able to trigger consensus formation.…”

“…We thus perform text sentiment analysis using VADER (Valence Aware Dictionary and sEntiment Reasoner) 39 , a python tool that assigns to each piece of text a score between -1 (very negative) and +1 (very positive). In line with other studies 19,23 , we adapt the VADER dictionary to the peculiar jargon and sarcasm used by WSB members (see Methods and Supplementary Materials S4). Figure 2C shows an intensive sentiment indicator, i.e., the mean sentiment of all daily posts/comments that mention GME.…”

“…23 . A possible solution is to manually assign weights to several idiosyncratic slang-origin terms popular on WSB 19 . We followed this route by adding to the VADER lexicon a new group of words reported in Table S4.1 together with their associated scores.…”

“…Such a highly coordinated financial 'operation' received a huge attention not only from the media and financial stakeholders but from the academic community as well. Following a popular stream of literature aimed at predicting stock market trends using social network moods 13,14 (with a recent focus on WSB and price movements of cryptocurrencies [15][16][17] ), most of the scholars' attention is being devoted to understand whether WSB activity, conversation sentiment and user interaction could be used to predict retail trading activity and GME returns, using linear regression models or machine-learning approaches [18][19][20][21][22][23][24] . Only a few empirical works address the more fundamental question of how coordination or consensus could spontaneously emerge in this context.…”

Reddit Dataset on Meme Stock: GameStop

“…Reddit has been the primary platform retail investors use to communicate with each other, including sharing and discussing news from social media and mainstream media, personal trading histories, memes, technical analyses, and strategies to facilitate global wealth transfer. The goal of the Reddit community online movement was colloquially named "Mother of All Short Squeezes" (MOASS) (Anand & Pathak, 2021;Betzer & Harries, 2022). MOASS exemplifies the populist intent of an online social movement observed in the dataset.…”