The man who started retail investing forum WallStreetBets, which fuelled the 2021 meme stock frenzy, said he’s been fighting with Reddit for years now and has launched a lawsuit against the company.
Earlier this month, Jaime Rogozinski, the founder of subreddit r/WallStreetBets, launched a lawsuit against Reddit for allegedly ousting him as the moderator of the group and blocking his trademark efforts.
“Reddit’s new slogan should be ‘We build it, they take it’,” Rogozinski said in an interview with BNN Bloomberg on Friday.
He said he grew and participated in WallStreetBets, but when he tried to move beyond the social media platform and registered the trademark, “all of a sudden I get kicked out and then they've been fighting me for three years on this.”
“I've just now decided to go public with this, but this battle has been going on for a long time and at this point, it's a matter of trying to figure out who exactly owns the property to WallStreetBets exactly," ‘What is Reddit’s endgame?,’ ‘What is their business model?’, there's a lot more questions than answers that I've gotten from this.”
In an email to BNN Bloomberg, a Reddit spokesperson said this is a “completely frivolous lawsuit with no basis in reality.”
“Jaime was removed as a moderator of r/WallStreetBets by Reddit and banned by the community moderators for attempting to enrich himself. This lawsuit is another transparent attempt to enrich himself,” the spokesperson said over email.
“It’s telling that he is filing this suit three years after he was banned by r/WallStreetBets and long after the community rose in mainstream popularity without his involvement. We’ll respond directly in court and continue to protect the best interests of the communities and moderators on our platform.”
Rogozinski created the chat forum on Reddit in 2012. The subreddit gained in popularity in mainstream investing just two years ago when a surge of individual retail traders used the platform to crush several prominent short-sellers.
One of the most well known examples is GameStop Corp.’s meme stock rally, when an army of Reddit day traders used the WallStreetBets forum to pump up shares of the retailer and fight back against large short positions by groups like Andrew Left’s Citron Research and Gabe Plotkin’s Melvin Capital.
From Jan. 8, 2021 to Jan. 29, 2021, GameStop stock soared 1,738 per cent, from US$4.42 a share to US$76.82.
While the stock surge has since eased and its last closing price on Thursday was US$20.14, it’s a prime example of how the retail investors took Wall Street by storm.
ATTITUDE SHIFT
Two years after Reddit retail traders pumped up stocks like AMC Entertainment Holdings Inc. and BlackBerry Ltd., Rogozinski said he thinks the attitude shift of investing personally with social media platforms and trading apps will continue.
“It's still there [meme stock investing], like there's a new generation that has a different mindset. It's not just about a style of investing, it's a different attitude towards taking matters into your own hands,” he explained.
“You have a lot of people, a lot of younger people that take their investment advice on social media, from TikTok, from Instagram, from whatever it might be. This whole gig economy has come from this post-financial crisis, do it yourself-ers right, and so this, it's an attitude shift really.”
Rogozinski thinks the lessons from the meme stock rally and surge of individuals looking to take their investments into their own hands will have a long-term impact on market behaviour.
NEW ERA OF INVESTOR RELATIONS
In the years to come, Rogozinski thinks there will be a larger change in the way that companies interact with investors.
“The next conversation that I haven't had heard anybody talk about, at least not publicly, is these companies are also appreciating the new relationship that you have with their investors,” he said.
“Currently, most publicly traded companies have a concentration of like, a handful of huge hedge funds and they have most of their stocks, so they’re shareholders they're not democratized, they really have to talk to about four of them, or 10 of them, or 20 of them.”
Rogozinski said he thinks companies appreciate having “a ton of smaller investors” so they can “maneuver to innovate and to not have to worry about the politics, and they can actually stimulate the economy.”
“They're taking them, capital markets, back to what they're supposed to be, which is ironically not meant to be a casino,” he said.
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