The WallStreetBets subreddit (WSB), widely credited with kickstarting GameStop’s epic stock run in recent weeks, was briefly taken private by moderators Wednesday night amid a tsunami of “so many comments and submissions that we can’t possibly even read them all, let alone act on them as moderators.” Discord also took steps to permanently ban the official WallStreetBets channel, citing moderators for “continuing to allow hateful and discriminatory content after repeated warnings.”
Discord was the first to act, shutting down the WSB server sometime around 6 p.m. In a statement provided to the press, the social media service said the WSB Discord server “has been on our Trust & Safety team’s radar for some time due to occasional content that violates our Community Guidelines, including hate speech, glorifying violence, and spreading misinformation. Over the past few months, we have issued multiple warnings to the server admin.”
The statement goes on to specifically clarify that the move was not “due to financial fraud related to GameStop or other stocks. Discord welcomes a broad variety of personal finance discussions, from investment clubs and day traders to college students and professional financial advisors.”
In the hours before the shutdown, a number of users recorded brief snippets of the server’s audio chat, which had descended into an indecipherable cacophony amid hundreds of crosstalking participants.
Meanwhile, on Reddit…
Then, sometime around 6:40 pm Eastern, WSB was set to private on Reddit, limiting public visibility and commenting abilities for existing and new posts. A message on the page during the downtime blamed “technical difficulties based on the unprecedented scale as a result of the newfound interest in WSB.”
The page was back up around 7:36 p.m., along with a new message from the moderators saying the subreddit had “grown to the kind of size we only dreamed of in the time it takes to get a bad night’s sleep.” Despite the use of special moderation software to handle the influx of attention, the WSB mods say that the “software isn’t allowed to read the Reddit news feed fast enough and submit responses, and the admins haven’t given us special access despite asking for it.”
Reddit representatives were not immediately available to respond to a request for comment from Ars Technica, but esports journalist Rod Breslau cited “Reddit admins” who confirmed that they “had no part” in the decision to take the subreddit private.
WSB mods were also quick to dispute Discord’s banning decision, saying that “if you gather 250k people in one spot someone is going to say something that makes you look bad… We blocked all bad words with a bot, which should be enough, but apparently if someone can say a bad word with weird unicode icelandic characters and someone can screenshot it, you don’t get to hang out with your friends anymore.”
Moderators also warned of fake Twitter accounts with “wallstreetbets” in their name claiming to speak for the increasingly popular subreddit (now 3.6 million members strong). Instead, they directed people to @wsbmod for official updates.
As far as the group’s most famous project, GameStop stock dropped precipitously in after-hours trading immediately following the move to take WSB private, going from $316 per share at 6:45 to under $250 per share by 7 p.m. The stock bounced back to a price of $291 in the hour following that dip, still significantly below the closing price of $341 at 4 p.m. Stock in cinema chain AMC saw a similar price dip and rally around the same times.
Social media users scrambled to new stomping grounds amid the upheaval tonight. A replacement subreddit board simply called WallStreetBetsNews had been set up prior to the brief privatization of the main group, and quickly grew to include 288,000 subscribers, as of this writing. On Discord, meanwhile, many users seem to have moved on to an extant (and heavily promoted) server called Big Pump Signal, originally created to speculate on cryptocurrencies but now increasingly focused on discussion of stock plays.
Can somebody do something?
The social media chaos comes as brokerage houses, exchanges, and regulators are increasingly expressing worry about the signals all this volatility is sending to traders. TD Ameritrade and Schwab both restricted certain kinds of trades in GameStop and AMC out of what TD Ameritrade said was “an abundance of caution amid unprecedented market conditions and other factors.”
“I have called for the New York Stock Exchange to suspend trading in GameStop stock for 30 days, to allow for a cooling off period”
NASDAQ CEO Adena Friedman, meanwhile, suggested on CNBC Wednesday morning that shares in these volatile stocks might need to be halted so everyone can catch their collective breath. “We do have technology that evaluates social media chatter,” Friedman said. “If we see a significant rise in the chatter on social media channels … we also match that up against unusual trading activity, [and] potentially halt that stock to allow ourselves to investigate the situation, to be able to engage with the company, and to give investors a chance to recalibrate their positions.”
GameStop and AMC both trade on the New York Stock Exchange (NYSE), so Adena’s comments are unlikely to have direct impact on those stocks. Trading in GameStop has been automatically and temporarily halted numerous times this week due to markers of extreme price volatility, not directly in response to examinations of social media chatter.
Massachusetts Secretary of the Commonwealth William Galvin, who has overseen the state’s securities division since 1995, has also called on the NYSE to halt trading in GameStop for 30 days “to allow for a cooling off period. I am hopeful that federal regulators will be looking into this as well.” While the SEC hasn’t publicly commented on any enforcement or investigation actions, the White House confirmed Wednesday afternoon that Treasury Secretary Janet Yellen is “monitoring the situation” surrounding GameStop stock.
For more on what exactly has been driving GameStop’s recent massive stock price increases (and no, it’s not anything relating to GameStop as an actual business), check out the comprehensive guide we published earlier today.