WSB is the Reddit community where everyone openly admits to running with pump-and-dump schemes, with the hopes to not be the dumb bagholder at the end.
Its a legally grey zone IMO. Its not a traditional pump-and-dump scheme, but the effects are basically the same.
They choose a stock, somewhat at random to pump. They use WSB to communicate and coordinate when the pump occurs. The idea is to use a stock that has nostalgic value (Gamestop, AMC, BBBY), but is in dire straights.
A shorter term, tactical goal, is to often find highly shorted stocks and/or stocks with high options leverage to cause either a short-squeeze or gamma-squeeze event.
Its all public knowledge, legally and morally grey IMO. I wouldn't touch it personally, but obviously you get a whole bunch of pump-and-dumpers together in one location on the internet, they're all going to be competing for the same money on the same forum.
It certainly has that reputation but it is largely unearned in my experience.
There is no explicit coordination happening to create pump and dumps. There has, on occasion, been some level of coordination when attempting to trigger a short squeeze but that is mechanically different than a pump and dump.
What it does do, though, is spur memetic investment, which can create a short term frenzy for some stocks but it is not a planned event. Thousands of people post stocks each day and every so often a stock will perform well enough to where the community will take hold of it and push it to pretty incredible heights. The most recent one would be TRKA. If you're switched on enough, you can make some pretty massive gains.
However don't take this as me defending their crypto scam. That's just downright not okay.
> What it does do, though, is spur memetic investment, which can create a short term frenzy for some stocks but it is not a planned event
Erm... investing in a security, then trying to create a meme is a pump-and-dump scheme by any other name. You've just changed the name "pump" to "meme", rather than using old-school behaviors like boiler rooms.
Its even "meming" the same information: too the moon, or whatever. In the 90s, it was all cold calls over telephone, but today you can use online forums to do this.
I'd argue that is a very simplistic way of looking at it.
There is always a narrative as to why a stock will go "to the moon". You say it's explicitly a pump and dump and it's not really, no. Look at GME, the idea was to restrict the float so that when the shorts got exercised, they would be trying to buy shares that didn't exist, creating exponential demand which would increase the price significantly. Not an impossible feat[0].
The "memetic" part of it is purely information exchange. That's all. If that's the barrier for entry for being considered a pump and dump, then I'd say anything which reports on a companys action could be a pump and dump. From Financial Times, to Bloomberg, to Mad Money, to StockTwits, to whomever else.
In what way is this different than a pump and dump? You tout the stock and say it's going to 5x, 10x, whatever because of X. Then the suckers buy. Then you sell.
2.5 years after the "MOASS", even after Ryan Cohen rugpulled WSB with BBBY, GME is still 6x the price it was before. Maybe it's all bagholders who are down 75% from Jan 2021, but that's still amazing.
The thing is, the GME situation is still developing. The new thing is that they're buying and directly registering their shares (DRS). This prevents brokers from lending shares out.
As a result of this, they own almost 25% of the company by themselves[0], which is absolutely incredible when you think about it. I know that they're expecting MOASS as a result of this and I'm a bit iffy on whether that can happen but I am eagerly watching to see what happens. Nothing like this has been attempted and it's just fascinating to me.
They're betting on a significant population of slow learners still readily available to be fleeced. Otherwise, it's con artists trying to fleece each other.
What's the relation between the coin and subreddit? Like I get that they share a name, but is it say endorsed on the sub itself? Endorsed by the mods? Is it popular among its users?