The man at the centre of the pandemic meme-stock craze appeared online for the first time in three years, sending the prices of the quirky and volatile shares sharply higher Monday.
Keith Gill, better known as “Roaring Kitty,” posted an image Sunday on the social-media platform X of a man sitting forward in his chair, a meme used by gamers when things are getting serious.
He followed that tweet with a YouTube video from years before when he championed the beleaguered company GameStop Corp. (GME-N), saying, “That’s all for now cuz I’m out of breath. FYI here’s a quick 4min video I put together to summarize the $GME bull case.”
GameStop in 2021 was a video-game retailer that was struggling to survive as consumers switched rapidly from discs to digital downloads. Big Wall Street hedge funds and major investors were betting against it, or shorting its stock, believing that its shares would continue on a drastically downward trend.
Mr. Gill and those who agreed with him changed the trajectory of a company that appeared to headed for bankruptcy by buying up thousands of GameStop shares in the face of almost any accepted metrics that told investors that the company was in serious trouble.
That began what is known as a “short squeeze,” when those big investors that had bet against GameStop were forced to buy its rapidly rising stock to offset their massive losses.
At Monday’s opening bell it appeared that Mr. Gill had reignited the phenomenon as shares of GameStop more than doubled. At midday, shares were trading 60 per cent higher. It’s the biggest intraday trading jump for GameStop since the meme craze of early 2021. Other meme stocks such as the struggling movie-theatre chain AMC were jolted higher as well.
Trading in GameStop was halted eight times before noon on Monday because of volatility.
Mr. Gill became a cause célèbre in 2021 after his posts on the Reddit subcategory Wallstreetbets ignited a David-versus-Goliath battle with large hedge funds that were betting heavily against the survival of GameStop.
The small guys won, at least for a while, driving shares of GameStop up more than 1,000 per cent in 2021 and other meme stocks as well. AMC (AMC-N) jumped 2,300 per cent in a very short span of time in the same year.
Some big traders posted colossal losses as GameStop shares raced from less than US$20 to close to US$400 each. Citron Research, Melvin Capital and other well-known hedge funds lost an estimated US$5-billion, according to analytics firm S3 Partners.
Some of those new and smaller investors believed, at least in part, that Ryan Cohen, co-founder of Chewy.com, could push the traditional retailer in a more online direction. Mr. Cohen built up a stake in GameStop before eventually joining the board and last year becoming its chief executive.
Joining the meme surge Monday was AMC Entertainment Holdings Inc., which leapt 33 per cent. Koss Co. (KOSS-Q), a headphone manufacturer, spiked 25 per cent, and BlackBerry Ltd. (BB-T), the onetime dominant smartphone maker, rose 7 per cent. The retailer Bed, Bath & Beyond, another meme stock, sought bankruptcy protection last year.
Some meme stocks, including GameStop and AMC, had been climbing earlier this month, and rapidly.
Shares of GameStop, which have faded steadily since 2021, had already risen 57 per cent this month. In January, GameStop reported its first annual profit since 2018, although it’s still unclear if Mr. Cohen’s turnaround plan will succeed.
AMC had risen 10 per cent over the past 30 days.
Those companies broke out Monday after Mr. Gill’s tweet.
The dynamics of the market as far as companies such as GameStop are concerned have changed, however.
When Mr. Gill and an online army of retail investors began buying up shares of GameStop, more than 140 per cent of the company’s tradeable shares were being shorted. That distorted number comes from the fact that some traders were borrowing against already shorted stocks to build even bigger bets against the company, vastly increasing their losses when the stock began to climb.
The short positions against GameStop’s tradable shares now stand just over 24 per cent, slightly more than the 22.5 per cent recorded in January.
Mr. Gill reaped a big profit investing in a troubled video-game retailer, but denied when he appeared virtually at a congressional hearing that he used social media to drive up GameStop’s stock price.
He told lawmakers at the time simply, “I like the stock.”
As Roaring Kitty, Mr. Gill had vanished from messaging boards after posting a video in June, 2021, of kittens going to sleep.
The story of Roaring Kitty and the meme-stock craze was turned into a movie last year called Dumb Money.