Despite its name, the WallStreetBets reddit community isn't actually in cahoots with Wall Street. In fact, they're actively pursuing a power shift "from Wall Street to Main Street," as now-banned WallStreetBets founder Jaime Rogozinski says.
Rogozinski was removed as a subreddit moderator in 2019, and both parties have their own reasons for the dispute. Regardless of the root of things, it's clear that today's WallStreetBets moderators and leaders are raking in some sort of profit and notoriety. Even with that in mind, the community is just that—a community. And that's precisely what keeps it in the gray area for regulation.
WallStreetBets briefly went private, but it's back for public mayhem
On Jan. 27—smack dab in the middle of the GameStop chaos—the WallStreetBets subreddit went private for one hour. They reopened the community to the public, although a team of moderators remained on duty to ensure that members were following the community guidelines.
The rules include "no market manipulation," "no pump and dumps," and "no cryptocurrency," among others. Of course, the moderators are the ones with discretion. They can decide what's lawful and what gets the boot on WallStreetBets.
How WallStreetBets moguls make money
With 9.13 million readers (and growing), the WallStreetBets community has aptly earned an infamous position in the modern-day stock market. Since WallStreetBets isn't a company, it isn't making revenue—but that doesn't mean the members aren't making returns.
In fact, WallStreetBets' leaders have cashed in millions for their risky bets and short squeezes from stocks like GameStop (NYSE:GME), AMC Entertainment (NYSE:AMC), and Bed Bath & Beyond (NASDAQ:BBBY), among others. It's the influence that makes all the difference. With more readers and more investors following your lead, your own returns are bound to multiply.
This is precisely why questions about market manipulation have been thrust upon the WallStreetBets community. The subreddit is living in a regulatory gray area of fiscal advice, and only members like Keith Gill (who goes by the name Roaring Kitty online) have been targeted by the government for questions of fiduciary disloyalty as a once-professional broker.
How to make money on WallStreetBets
The fact of the matter is that a WallStreetBets investment will inherently include a heightened level of risk. That's just the way it goes around in that neck of the woods. If a retail investor wants to make money on WallStreetBets, they have to be willing to bet hard and follow the herd.
This type of investing activity isn't suitable for everyone. Options and day trading is popular with members, and both of these tactics require consistent attention to the stock chart. Keep that in mind as you weigh the pros and cons of going in on a WallStreetBets-endorsed stock.
Low risk? Try SmallStreetBets instead
Unlike WallStreetBets, the SmallStreetBets subreddit community focuses on small-time and affordable risks and gains. This might be more suitable for the average retail investor (because, let's be honest, not all of us have thousands or more to lose).