The dynamics of the Reddit collective action leading to the GameStop short squeeze

In early 2021, the stock prices of GameStop, AMC, Nokia, and BlackBerry experienced dramatic increases, triggered by short-squeeze operations that have been largely attributed to Reddit’s retail investors. Here we shed light on the extent and timing of Reddit users’ influence on the GameStop short squeeze. Using statistical analysis tools with high temporal resolution, we find that increasing Reddit discussions anticipated high trading volumes. This effect emerged abruptly a few weeks before the event but waned once the community gained widespread visibility through Twitter. Meanwhile, the collective investment of the community, quantified through posts of individual positions, closely mirrored the market capitalization of the stock. This evidence suggests a coordinated action of users in developing a shared financial strategy through social media—targeting GameStop first and other stocks afterward. Overall, our results provide novel insights into the role of Reddit users in the dynamics of the GameStop short squeeze.