Finance

GameStop shares jump 30% as trader ‘Roaring Kitty’ who drove meme craze posts online again

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A man passes by a GameStop location on 6th Avenue in New York, March 23, 2021.
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GameStop shares rallied more than 37% in the premarket Monday after “Roaring Kitty,” the man who inspired the epic short squeeze of 2021, posted online for the first time in roughly three years.

The post, a picture on X of a video gamer leaning forward on their chair as to indicate he’s taking the game seriously, marked Roaring Kitty’s first post on the platform — or on Reddit— since 2021.

Roaring Kitty, whose legal name is Keith Gill, was a former marketer for Massachusetts Mutual Life Insurance. Gill, who goes by DeepF——Value on Reddit, attracted an army of day traders who cheered each other on and piled into the brick-and-mortar video game stock and call options between 2020 and 2021.

Hedge fund Melvin Capital, which was heavily shorting GameStop, became a target of the army of amateur traders and suffered huge losses that prompted the hedge fund arm of Citadel, as well as Point72, to infuse close to $3 billion into Melvin to backstop its finances.

The eye-dropping mania once forced brokerages including Robinhood to limit trading in heavily shorted stocks as it blew up their clearinghouse margin. A Robinhood user filed a class-action lawsuit following the app’s decision to restrict GameStop trading on its platform. Robinhood won the dismissal of this lawsuit in August 2023.

There was another class-action lawsuit brought against Gill, alleging that he pretended to be a novice trader despite being a licensed professional.

The volatility also spawned a series of Congressional hearings around brokers’ practices and gamifying retail trading, which involved the leaders of Robinhood, Melvin Capital, Reddit, Citadel as well as Gill. The history-making episode inspired 2023 movie “Dumb Money,” in which Paul Dano played Gill.

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GME 5-year chart

In January 2021, shares hit an all-time intraday high of $120.75 per share, split adjusted. GameStop announced a 4-for-1 stock split in July 2022. As retail interest faded the stock collapsed, along with other meme stocks like AMC. The shares last month hit a three-year low of $9.95.

Recently, the stock has started to move higher again, which may have rekindled the trader’s interest. The stock is up 57% so far in May and closed Friday at $17.46.

However, GameStop’s most recent earnings report showed a discouraging picture at the video game company. In late March, the firm said it had cut an unspecified number of jobs to reduce costs and reported lower fourth-quarter revenue amid rising competition from e-commerce firms.

GameStop posted revenue of $1.79 billion for the fourth quarter, compared with $2.23 billion in the same quarter a year earlier.

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