The r/WallStreetBets community - the "apes" - is once again rallying behind a beleaguered stock. This time, the beneficiary of their collective enthusiasm is WeWork Inc (NYSE: WE), a onetime darling of the startup world.
Now, with the company signaling distress, the apes are swooping in, pushing shares up over 130% at one point Thursday.
How Retail Traders Got Here: Before we get into WeWork's saga, it's worth revisiting the now-legendary GameStop Corp (NYSE: GME) short squeeze.
Early 2021 saw the birth of the '"meme stock" phenomenon on r/WallStreetBets. The community noticed that GameStop was heavily shorted by institutional hedge funds, so retail traders piled into the stock, triggering a massive short squeeze.
The rocket emoji became a rallying cry, symbolizing stocks the traders believed were headed "to the moon." The movement underscored the power of retail traders acting collectively against Wall Street.
WeWork's Fall From Grace: WeWork's vision of revolutionizing shared workspace seemed poised to disrupt the traditional office setup. Founded in 2010 by Adam Neumann and Miguel McKelvey, the company's innovative model involved leasing office buildings, renovating them to create vibrant co-working spaces and renting them out.
Financial irregularities, leadership crises and failed IPO attempts led to its dramatic fall.
As the largest private tenant in Manhattan by 2019, WeWork faced intense scrutiny over its mounting losses, which culminated in its valuation plunging from $47 billion to $7 billion by the end of that year, according to The New York Times. The pandemic's blow to commercial real estate and in-person work further dented WeWork's prospects.
The company issued a financial filing Tuesday saying it had "substantial doubt" regarding its future.
The Return Of The Apes: Social media is again playing a pivotal role in the drama. Well-known FinTwit (Financial Twitter) user @nikitabier posted on X, formerly Twitter, comparing WeWork's situation to the GameStop scenario in 2021. While the post is now deleted, it had two screenshots, one showing a WeWork chart down 98% since its IPO and the other being a GameStop chart from January 2021 with shares up 168%.
On Reddit, one user's own due diligence on the stock - posted Wednesday after the market close - elicited a wave of enthusiastic responses that seemed to have triggered the rally.
In contrast with previous stocks that came into favor with retail traders, WeWork has a smaller short interest: 2.57% of shares are sold short, according to Benzinga data.
Comments like "Oh well, this trade is so dumb as it can get, so it will go to the moon of course... I'm in" and "Picked up 20k shares. #rollsdice" showed how bullish the Reddit community is on this trade.
One user wrote, "picked up 5k shares so I can meme it."
Back on X, the r/WallStreetBets chairman (@WSBChairman) responded to @nikitabier with a series of "Hmmmm" posts, coupled with screenshots of WeWork's charts getting squeezed.
Whether driven by genuine belief in WeWork's potential or mere speculation, the apes at r/WallStreetBets appear to have boosted another stock.
WE Price Action: Shares of WeWork ended Thursday's session 46.34% higher at 18 cents.