WallStreetBets says Reddit group hit by "large amount" of bot activity
Moderators of the WallStreetBets online discussion forum, which has been credited with creating a frenzy in the shares of GameStop and others, said bots are responsible for a "large amount" of the stock-recommendation content being posted in its popular Reddit group.
Bots are computer-generated accounts that post automatic messages on Reddit, Twitter and other social media platforms.
In a statement to CBS MoneyWatch, a spokesperson for the popular Reddit group described the bot activity as "recent" and said the group has done its best to remove the posts.
"We've detected a large amount of bot activity in the subreddit," the WallStreetBets spokesperson said. "We can't speak to the source, but we have seen our automoderator block a lot of posts recently that were very similar in content."
The spokesperson declined to give an example of one of the bot posts or specify what percentage of the activity in the WallStreetBets discussion group could be attributed to bots. The spokesperson didn't identify his or her name, but the comment to CBS MoneyWatch came from an email that is listed as the official press account for WallStreetBets on Reddit.
Evidence suggests that more and more of the chatter on WallStreetBets is being driven by bots, not real investors. Ben Hunt, a former hedge fund manager and co-founder of Wall Street research firm Epsilon Theory, tweeted on Saturday that his firm had analyzed 30,000 posts published on WallStreetBets in the previous 24 hours — it found that 97% of those appeared to be generated by bots.
It's not exactly clear what information the bots are posting on WallStreetBets. But on Twitter and elsewhere, bot-programmers have been known to post the same message numerous times from multiple fake accounts in order to amplify their message.
On Friday, the Securities and Exchange Commission said it was monitoring the "extreme price volatility of certain stocks' trading prices over the past several days" and that the regulator would "act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws."
The SEC's statement said nothing about bots and did not name Reddit or WallStreetBets. Investors are not allowed to misrepresent themselves in order to move stock prices, though it's not clear whether the use of bots is itself illegal.
An alert on Investor.gov, the SEC's education page, warns individuals against buying stocks solely based on recommendations on discussion boards. "One person can easily create the illusion of widespread interest in a small, thinly traded stock by posting numerous messages under various aliases," the alert says.
The GameStop saga has been called a battle between Main Street and Wall Street. And in the past few days, a growing number of what appears to be individuals on Reddit, Twitter and other platforms have anonymously directed others to buy shares of GameStop and others stocks. On Friday, a billboard in New York's Times Square also encouraged people to buy shares of GameStop.
But WallStreetBets appears to remain the nexus of the unusual market activity. Membership of the Reddit group has grown rapidly in the past two weeks. As of Monday morning, the Reddit forum had nearly 8 million members, up from around 2 million just two weeks ago.
