A Week Inside the WallStreetBets Forum That Launched the GameStop Frenzy

The tongue-in-cheek meme has some truth to it. In recent weeks, many stocks that WallStreetBets had sent soaring “to the moon” have crashed to earth. Forum fave

GameStop Corp.

GME 2.54%

closed Friday at $52.40, down from an intraday peak of nearly $500 just a little over two weeks ago.

What follows is a diary of five days of chaos and jokes on WallStreetBets (we can’t publish all the profanity).

Monday, Feb. 1

There was jubilation across WallStreetBets. Shares of GameStop—known by its ticker, $GME—were rising in premarket trading after a mind-boggling rally to $483 the previous week. Members were amped for more. They wondered: What was preventing the stock—which started the year around $18—from topping $1,000?

The weekend had already seen celebrations. WallStreetBets members had purchased billboard ads touting GameStop. In states ranging from Colorado to Minnesota to Georgia to Tennessee, they were seemingly everywhere.

“Bought 4 billboards on I-15 between Provo and Salt Lake City,” u/TheWardOrganist posted over the weekend. “$160 for four days—not even half a share of GME to fuel this rocket to Mars!”

One user quipped that he foresaw a movie titled “4 Billboards Outside Provo, Utah’’ about Elon Musk “flying to the moon”—a common r/WSB mantra.

“I’m going long on billboards,” another joked. Within seconds, someone else had pivoted: Stop spending money on billboards, the user said. “Buy more $GME.”

In the end, it probably wouldn’t have mattered. GameStop closed down 31% at $225—logging the first drop of the week.

But r/WSB had other problems. While GameStop was tumbling, silver prices were surging. Media reports attributed the rise to WallStreetBets, and the forum was mad. To buy silver, members insisted, was to fall for a hedge-fund distraction, coordinated to pull focus from GameStop.

By Monday’s end, one thing was becoming clear: With roughly eight million members at that point—versus fewer than two million a month earlier—WallStreetBets wasn’t the same absurd internet corner it once was. Members were looking out for “imposters.” Fingers were pointed. Posts demanded: Hold the line.

“This is a test of human nature,” u/ItsAllJustASickGame posted Monday night. “Will you be selfless or selfish?”

“GIVE THEM NOTHING,” the post continued. “BUT TAKE FROM THEM EVERYTHING.”

Tuesday, Feb. 2

By Tuesday, not much had improved. GameStop shares were tumbling, erasing almost half their value in premarket trading. Keep holding, users were saying, but brace for the possibility that things could get much worse.

Still, WallStreetBets was excited: Billionaire Mark Cuban of “Shark Tank” fame was set to answer members’ questions—in what is known as an AMA, or Ask Me Anything, on Reddit. As the GameStop frenzy had unfolded, Mr. Cuban had on Twitter and elsewhere defended individual investors.

“He’s literally one of us,” u/pim9daddy214 commented in late January about the Dallas Mavericks owner, whose net worth is estimated by Forbes to top $4 billion. “HE’S ONE OF THE ONLY RICH PEOPLE STICKING UP FOR US,” u/Boogyman422 said days later.

On a forum in which members talk of making “suits” and billionaires bleed, Mr. Cuban is among the few businessmen WallStreetBets embraces. Here, retail traders sing the praises of Papa (Elon) Musk. GameStop board member Ryan Cohen—Daddy Cohen on r/WSB—is credited with helping launch GameStop’s rise. “Chamath Palihapitiya for President,” one user said of the venture capitalist last month.

“I CALL THEM RENEGADE BILLIONAIRES,” u/Boogyman422 said. “THANK YOU WE LOVE YOU FOR BELIEVING AND SEEING WHAT WE DO TOO!!!!”

That morning, Mr. Cuban told WallStreetBets users during the AMA to hold GameStop if they “can afford to.” The lower the price goes, he said, the more powerful members could be stepping up to buy the stock again. He made similar comments on CNBC later that day.

“Thanks for taking on Wall Street,” Mr. Cuban wrote under his username u/mcuban. “WSB changed the game far more than everyone on this board will ever get credit for.”

It wasn’t enough to stop GameStop’s slide. Shares closed at $90—down 60%. Posts reiterated: Prove everyone wrong.

Yet skeptics were starting to emerge.

“I’m going to get a lot of hate for this, but I think we need a reality check,” u/Taking_The_Odds commented. “The stock is going to be worthless soon.”

u/TastyCodex93 wasn’t pleased: Don’t post discouraging things, the user said. “[You’re] helping the enemy.”

Wednesday, Feb. 3

By midweek, r/WSB users were frustrated. How, some wondered, could $GME be falling? Members had posted screenshots showing they were still buying shares.

There had to be another reason behind the tumble, some thought. A theory emerged: it must be a “short ladder attack.”

According to posts on WallStreetBets, such an attack works like this: To make it appear as if a company’s share price is dropping, bearish short sellers sell nonexistent shares to each other at lower and lower prices.

Or something like that—even on r/WSB, the particulars were a bit unclear. But many members agreed that the “short ladder attack” would, in turn, spur panic selling.

In reality, there was one big problem with that theory: Short sellers, academics and regulatory experts had never heard of a “short ladder attack.” Many said conducting such an endeavor would be extremely unlikely for a stock like GameStop—if not impossible.

The theory had been circulating on WallStreetBets for several days, and then for some members it began to unravel.

“How do you know this is in fact a short ladder attack?” u/GoldilocksRedditor questioned.

“Honestly, it’s getting to the point where every drop is called a short ladder in this sub, when 80% of these people didn’t even know what it was 2 weeks ago,” u/dedriuslol said.

“Well no one did because you literally can’t find a single post on the internet about it before then,” u/Psturtz replied.

“Yeah has anyone here played chutes and ladders before?” u/OCOWAx quipped about the childhood board game.

And, just like that, the natural order of WallStreetBets had been restored.

Thursday, Feb. 4

Wednesday’s session had closed with surprising news: Keith Gill, better known as u/DeepF—ingValue, or DFV, to Reddit, said he would be pausing his GameStop updates. The “one true king of WSB,” as one user had dubbed Mr. Gill, was stepping back.

Mr. Gill’s regular screenshots of his E*Trade account had made him a Reddit celebrity. No one else on r/WSB, it appeared, had struck it as big with $GME as he had. At one point the week before, a screenshot of his brokerage account showed a roughly $20 million daily gain on GameStop shares and options. Users posted memes of Mr. Gill, overlaying text reading “LEGEND” and “HOLD.”

Behind the scenes, the spotlight on Mr. Gill was growing harsh. Massachusetts regulators had started asking whether his posts were problematic given his former day job at Massachusetts Mutual Life Insurance Co. Meanwhile,

Rep. Maxine Waters

(D., Calif.) said she wanted him to appear before a congressional hearing. Mr. Gill declined to comment. A spokeswoman for MassMutual said the company is continuing to review the matter and has no further comment.

WallStreetBets users closed ranks. “Serious note,” u/haleykohr posted. “Respect the decisions of [DeepF—ingValue] from here on out.”

Another user, u/TheTronJavolta, replied: “We need to let the king live the life he wants.”

Friday, Feb. 5

On many posts and comments during the GameStop frenzy, a common refrain appeared: “This is not financial advice.”

“I eat crayons and make bad choices. This is not financial advice.”

“Just a monkey, not financial advice.”

The refrain was simultaneously serious and flippant—in place for regulators, real and imaginary, who may have been lurking. “Nightly hello to SEC interns and all bots,” u/passionpaindemonslay posted in the early hours of Friday. “Hope you guys have a pleasant and safe night.”

By the time the new trading day rolled around, r/WSB members had choices to make. In just four days, GameStop shares had fallen 84%. Nine days earlier, the videogame retailer had closed with a market value bigger than 232 companies of the S&P 500. Now it was smaller than all of them.

Some r/WSB members had been lucky enough to cash out early. Others didn’t time the trade so well. “Sold at 53” dollars, one user posted, alongside three crying-face emojis.

Others were undeterred.

“I sold my Tesla shares for these GME,” u/Dogeluver posted. “I’ll hold till they buy me a Tesla.”

GameStop shares finished the day up 19% at $63.77. The brief reprieve was enough to keep some members in the game.

“This is the most fun I’ve ever had losing money,” u/AvalieV posted Friday night. “See you next week.”

Write to Caitlin McCabe at caitlin.mccabe@wsj.com