Its a legally grey zone IMO. Its not a traditional pump-and-dump scheme, but the effects are basically the same.
They choose a stock, somewhat at random to pump. They use WSB to communicate and coordinate when the pump occurs. The idea is to use a stock that has nostalgic value (Gamestop, AMC, BBBY), but is in dire straights.
A shorter term, tactical goal, is to often find highly shorted stocks and/or stocks with high options leverage to cause either a short-squeeze or gamma-squeeze event.
Its all public knowledge, legally and morally grey IMO. I wouldn't touch it personally, but obviously you get a whole bunch of pump-and-dumpers together in one location on the internet, they're all going to be competing for the same money on the same forum.
There is no explicit coordination happening to create pump and dumps. There has, on occasion, been some level of coordination when attempting to trigger a short squeeze but that is mechanically different than a pump and dump.
What it does do, though, is spur memetic investment, which can create a short term frenzy for some stocks but it is not a planned event. Thousands of people post stocks each day and every so often a stock will perform well enough to where the community will take hold of it and push it to pretty incredible heights. The most recent one would be TRKA. If you're switched on enough, you can make some pretty massive gains.
However don't take this as me defending their crypto scam. That's just downright not okay.
community provided liquidity thats is then locked? kind of perfect imo
there’s no reason anymore that a $600,000 sale tanks $50m asset by 90%, just a bad system design where there is no liquidity incentive
why even give nocoiners cannon fodder? just do the thing that already distributes the load well enough and fits the risk profile of enough people
Can't tell who you're asking this of, but as a nocoiner I gotta say it made me giggle... we invest in popcorn, not cannon.
