He never imagined the Reddit community he created in 2012 would morph into a force so powerful that it would send GameStop Corp. GME 67.87% shares into overdrive, nearly topple a hedge fund and leave professional money managers around the country staring at Twitter with their mouths agape.
“It’s a little like watching one of those horror films where you can see the bad guy slowly going up the stairs,” Jaime Rogozinski said. “You see this train wreck happening in real time.”
Mr. Rogozinski started WallStreetBets while working as an information technology consultant for the Inter-American Development Bank in Washington, D.C. Back then, he was single, making a decent living and looking for something to put some play money into. The only problem was the conventional wisdom of sticking with index-tracking funds bored him.
“I’d go on different forums and ask them, ‘Hey, what do you think about XYZ?’ And most times the sentiment would be ‘It’s too risky, don’t try to pick stocks, you’re never going to win,’” he said.
The sober advice doled out in online communities like Bogleheads wasn’t cutting it for him. Neither was the commentary of investment banking analysts on cable TV, fixated as they were on net present values, cash flows and price-to-earnings ratios. He decided to create a hub on message-board operator Reddit where like-minded people could gather to exclusively discuss the type of trades that would make a financial adviser’s skin crawl. Their approach would be more akin to gambling than spreadsheet analysis, and their motto something along the lines of “YOLO,” short for “you only live once.”
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The group counted only a few thousand subscribers in its first few years—among them, former pharmaceutical executive Martin Shkreli, who briefly served as a moderator before being convicted of securities fraud. (WallStreetBets’ Twitter account wished him good luck on his sentencing in March 2018.)
Everything changed in 2019. Brokerage giants Fidelity Investments and Charles Schwab Corp. eliminated trading commissions. Interest in retail trading exploded, and the number of WallStreetBets subscribers swiftly crossed 500,000—then one million during the market selloff of March 2020 and 2 million during the now-notorious campaign to drive GameStop shares higher.
“ ‘A massive group of people have organized where they collectively have a seat at the poker table, which was previously invite-only.’ ”
— WallStreetBets founder Jaime Rogozinski
WallStreetBets users have driven headfirst into bets on everything from cruise-line operators hit by the pandemic to Lumber Liquidators Holdings Inc., the company embroiled in scandal following reports that it had installed flooring with excessive amounts of formaldehyde. And they have done so unabashedly, celebrating both their victories and their losses with gusto. (The community has dubbed posting screenshots of the latter, which frequently garners thousands of upvotes, as “loss porn.”)
“A lot of other places that discuss trading are really pretentious. At WallStreetBets it’s both, ‘Look at my money!’ but also ‘Look at all this money I lost,’ and I think that’s what’s refreshing to people,” Mr. Rogozinski said.
At its best, WallStreetBets showed trading didn’t have to exclusively be a Patagonia-vested man’s game. It was part of the nascent movement to democratize the investing world by breaking down the barriers to entry, even if some people would be stung by brutal losses along the way. Many years ago, Mr. Rogozinski recalls having to call Wachovia and shell out a $30 or so commission fee to buy Google Inc. shares. Now, anyone with a phone or an internet connection can get trading in minutes—and show off their prowess or lack thereof to thousands of other individuals.
“A massive group of people have organized where they collectively have a seat at the poker table, which was previously invite-only,” Mr. Rogozinski said. “You can’t ignore them anymore.”
Mr. Rogozinski found some other investing forums ‘pretentious,’ and the advice of many Wall Street insiders uninspiring, when he started WallStreetBets.
Growing Pains
Looking past the forum’s banter and Jerome Powell memes, it became clear to Mr. Rogozinski that the WallStreetBets community had a seedy underbelly—a side that he increasingly struggled to reckon with.
First, there were the potential legal issues. As WallStreetBets grew, it faced accusations—often lodged by angry short sellers—of market manipulation. Moderators urged users not to make posts “for the purpose of instigating or coordinating a group effort to move the market for a security.” But that didn’t silence the community’s critics.
Then there was the hate speech. Last year, Mr. Rogozinski decided to do some housekeeping and scrub some of the more distasteful content being shared in the community. In an off-Reddit chat room associated with WallStreetBets, he found language rife with obscenity, racism and antigay views that moderators let stand.
“There were a handful of mods who were straight up white supremacists,” he said. As a Jewish man married to a Mexican woman, he found it impossible to stomach.
“I have really thick skin and people can say whatever they want to me, but at some point there’s a moral standpoint—like with my kids, I don’t want them to think, ‘Well, they can say whatever they want about you,’” he said.
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Mr. Rogozinski wound up deleting the private chat room hosted on Discord where the offensive messages were exchanged. He also removed some of the moderators. The backlash was swift: Enough users chafed at his actions—along with his promoting a book based on WallStreetBets, as well as an esports-style trading competition under the WallStreetBets name—that he was booted out by other moderators. He hasn’t moderated the community since April.
It has been impossible for him to escape his legacy, though. Just last week, he got a phone call from Citron Research founder Andrew Left. The short seller, who has been publicly betting against GameStop, begged Mr. Rogozinski for help. He said he had been attacked by hordes of angry investors online, some of whom had even targeted his children.
A Reddit spokeswoman said the company prohibits users from posting or soliciting illegal transactions, doxing others and engaging in threats of violence. She added that the company would “cooperate with valid law enforcement investigations or actions as needed.”
Mr. Rogozinski, unable to do much from the sidelines, was pained by Mr. Left’s call.
When big investors like Carl Icahn and Bill Ackman get embroiled in a public spat, “it’s like watching a heavyweight boxing match,” he said. But when an online mob goes after an investor’s kids or spouse—that crosses the line, he said.
“It’s no longer what it used to be,” he said.
Retail Trading Mania
Write to Akane Otani at akane.otani@wsj.com