The stock market frenzy around GameStop has been years in the making, reflecting the parallel growth of two extremely online communities: users of the stock trading app Robinhood and members of the Reddit message board r/wallstreetbets.
Founded within 15 months of each other, Robinhood and r/wallstreetbets each grew slowly at first and then in a sudden rush in recent months as the coronavirus pandemic kept many people at home, including those looking for new hobbies.
Here's a timeline of how r/wallstreetbets, also known as WSB, and Robinhood came to be.
January 2012: The "wallstreetbets" subreddit is created by Jaime Rogozinski, an entrepreneur living at the time in Washington, D.C. Its initial motto is playful, with little hint of what is to come: "Inspired by earnings seasons. Let's play." (Later, the motto will change to something more sinister-sounding: "It's like 4chan found a Bloomberg terminal.") The discussion board will become known by the shorthand WSB.
Late 2012: The culture of WSB begins to take shape. Even though it's unorganized and small, it attracts people who aren't interested in relatively boring investments, like index funds, or in traditional ways of measuring the value of stocks. And Reddit's mostly self-regulating communities ensure that users set the culture. One popular early post is a "great vid" in which investor Mark Cuban says "diversification is for idiots."
April 2013: Robinhood is founded in the San Francisco Bay Area. Initially it's just a way to track stocks, but the company is building toward the idea of being an online brokerage with no commissions. It targets younger potential investors with a mobile-only trading platform, and it will go on to become a favorite with WSB users.
Oct. 14, 2013: Robinhood wins approval from the Financial Industry Regulatory Authority to operate as a stock brokerage, allowing it to expand beyond just tracking stocks.
February 2014: Barely two years old, WSB surpasses 5,000 subscribers on Reddit, according to SubredditStates, a site that tracks message boards. It's still tiny by Reddit standards, but the message board has a certain rhythm down: discussion of earnings, advice about how to trade off the news and tales about a "kid" who lost $100,000 by betting wrong on Twitter.
December 2014: After years of development, Robinhood launches its first trading app to the public on Apple's iOS app store. Reviews are positive, and it's a challenge to other online brokerages that charge fees for each transaction, such as E-Trade.
April 2015: By now, a popular new feature is beginning to appear on WSB frequently, the label "YOLO," short for "you only live once." It starts to capture the culture of the message board, in which people justify taking big, risky bets on the idea that investors should live it up.
June 2015: Robinhood wins an Apple Design Award.
August 2015: Robinhood launches its app on Google's Android operating system, creating a much bigger possible customer base. Within two weeks, the number of daily active users nearly triples, from 67,063 to 176,883, according to data from the app analytics company Apptopia. WSB, meanwhile, has about 18,000 subscribers.
Oct. 24, 2015: Bigger names start to take notice of WSB. Martin Shkreli, the pharmaceutical executive best known at the time for raising drug prices, gets an invitation to join WSB while he's doing a Reddit Q&A. "I'm looking at it," Shkreli responds. His personality ends up as a clear fit with WSB subscribers, and eventually someone with his name becomes a WSB moderator.
May 2016: Robinhood wins a design award from Google.
Nov. 9, 2016: As the votes are being counted in the presidential election, the No. 2 post on WSB is a proposal to make Republican Donald Trump a moderator of the message board. Trump "has created some great trading opportunities for us today and in the coming weeks. As appreciation, and to Make WSB Great Again, I hereby petition that he become a WSB mod and WSB god," a user wrote.
January 2017: WSB crosses the 100,000-subscriber threshold. Robinhood hits 200,000 daily active users.
April 2017: Robinhood, still a small startup and looking to expand both its user base and its resources, raises $110 million in venture funding that values the company at around $1.3 billion. The valuation makes it another of Silicon Valley's billion-dollar "unicorns."
July 25, 2017: An early sign of WSB's influence on the market appears. Some Reddit users had said for months that they had been buying stock in the chipmaker AMD, thinking it was undervalued, and they are rewarded when the company says in its earnings report that it's raising its sales forecast. "Congrats to r/WallStreetbets!" journalist Joe Weisenthal tweets.
December 2017: Robinhood introduces options trading, a riskier form of investing in stocks than simply buying them. Options are contracts allowing investors to buy or sell shares at specific prices; investors use them as a kind of bet on the stocks' direction. But the contract may be worthless if the stock moves in the other direction. Options can generate steep losses if people don't use them correctly.
March 9, 2018: WSB users come to the defense of Shkreli on the day he's sentenced to federal prison after a jury found him guilty of fraud. As usual, it's unclear how much they're joking.
May 2018: Robinhood raises another $363 million, which values the company at $5.6 billion. Robinhood has 664,775 daily active users, according to Apptopia, and it is in the middle of a downward slide that will trim its user base closer to 500,000 people within months.
Nov. 9, 2018: Though Robinhood isn’t a star yet, its business model is coming under more scrutiny. The Wall Street Journal details in story how Robinhood sells “order flow” to electronic trading giants such as Citadel Securities. Ordinary investors may pay a slightly worse price while trading, while giants make money through more efficient trades. Robinhood had disclosed the controversial but legal practice way back in 2013.
June 2019: Retail is slumping nationwide, and GameStop shares drop sharply after the company announces poor earnings and cancels its shareholder dividend payments. Mike Hickey, an analyst for the research and investment management firm The Benchmark Company, says he cut his expectations for the company "as the business burns to the ground."
April 1, 2019: WSB ranks No. 2 across all of Reddit's message boards for the number of comments per day, reflecting not only its popularity but also the increasingly heated debate that is becoming its hallmark. Later, it will sometimes be No. 1.
July 2019: Robinhood receives another investment, this time $323 million, at a valuation of $7.6 billion.
September 2019: The tactics of Robinhood and the often toxic language on WSB get more scrutiny from NBC News and other outlets, including screenshots boasting about major losses and frequent jokes about suicide.
In the same month, a WSB user publishes a screenshot with a list of GameStop trades and a reference to Burry’s position on the same stock. The user will go on to produce many monthly screenshots of investments in the stock, the most recent of which was posted Thursday afternoon.
December 2019: Robinhood launches a new feature that allows users to buy fractions of shares, making it easier for people with a limited budget to invest in any company.
March 2020: A sudden surge in interest pushes WSB above 1 million subscribers after closures related to the coronavirus pandemic begin keeping many people at home. Among them is Dave Portnoy, the founder of the Barstool Sports website and a frequent target of criticism for his company's handling of gender and racial issues. He turns to the stock market as a replacement for sports betting and has a large audience on social media.
In the same month, Robinhood experiences a spike, surpassing 2 million users, according to Apptopia. Search engine interest also jumps, according to Google Trend data.
April 3, 2020: GameStop's stock price hits a low of $2.57.
May 2020: Robinhood raises $280 million of funding that values the company at $8.3 billion.
June 2020: A multimonth rally in U.S. stocks that had declined at the start of the pandemic is seen as partly the result of amateur investors' jumping into the market. Deutsche Bank analyst Parag Thatte points to Robinhood trader data to show that institutional investors are chasing amateur investors.
Also in June, Robinhood user Alex Kearns, 20, dies by suicide in Illinois after he believed he had lost hundreds of thousands of dollars. In a note, he blamed Robinhood.
Nov. 16, 2020: Ryan Cohen, an investor and entrepreneur, launches a campaign to get GameStop to reinvent itself, sending a letter to the board of directors suggesting it could become the Amazon of gaming. Cohen gets a board seat in response.
December 2020: Robinhood hires the investment bank Goldman Sachs to help it become a publicly traded company, according to Reuters. It is also fined $65 million by the Securities and Exchange Commission for misleading investors about how it makes money and how it executes trades, although it admits no wrongdoing.
Jan. 14, 2021: The battle between GameStop short sellers and WSB users begins in earnest, as purchases by both sides send GameStop stock surging by 27 percent in one day. CNBC's Jim Cramer credits "open plotting" by Reddit users and is awed: "It's incredible to watch. I think they're succeeding beyond their wildest dreams."
Jan. 19, 2021: Citron Research, a short-selling investment firm, tweets that GameStop buyers are "the suckers at this poker game," a comment that only seems to encourage WSB users even more. Citron later calls Reddit users "an angry mob" and vows to quit commenting publicly about GameStop.
Jan. 22, 2021: GameStop trading becomes so volatile that it is halted at least four times; its stock surges by 51 percent in a day and closes at a then-record. WSB users celebrate and vow more, with one user writing, "GUYS PLEASE HOLD< I GOT TO PAY OF MY STUDENT LOANNS."
Jan. 25, 2021: GameStop shares surge again, and the short-squeeze fight enters another week.
Jan. 27-28, 2021: Everything seems to reach a boiling point at once. WSB goes offline for several hours as its moderators catch up to the volume of material being posted by its now 5.2 million subscribers, while Robinhood and other brokerages impose strict limits on trades involving GameStop, sparking a backlash by WSB users and others who believe the brokerages are siding with hedge-fund short-sellers.