Roaring Kitty Pounces Again: GameStop Shares Surge as Meme Stock Hype Levels Up

Roaring Kitty Pounces Again: GameStop Shares Surge as Meme Stock Hype Levels Up

3 minute read
Published: 6/5/2024

In a move that is sure to make Wall Street financial analysts reach for their anxiety medication, GameStop shares soared by more than 80% in pre-market trading on Monday. The surge came after a post trickled down from Reddit's highly caffeinated user base, displaying a $116 million bet on the company by Keith Gill, better known as 'Roaring Kitty' on YouTube and 'DeepF**kingValue' on Reddit.

Keith Gill, the man with more pseudonyms than a spy novelist, revealed his portfolio holding a jaw-dropping 5 million GameStop shares, approximately 1.8% of its publicly available stock, along with 120,000 call options expiring on June 21. This revelation was enough to send the stock market into a frenzy typically reserved for the giveaway of free concert tickets.

Gill's last publicized portfolio from April 2021, looking almost quaint in hindsight, showed him holding 200,000 GameStop shares, worth $30.9 million at the time, and call options valued at $65.7 million. Now, like a digital-age Midas, everything 'Roaring Kitty' touches seemingly turns into stock market gold.

The impact of Gill's latest move was immediate, boosting GameStop's market value by roughly $4.6 billion after the initial trading frenzy. But, like a pop album from the early 2000s, it wasn’t just GameStop that benefited. Other meme stocks such as AMC Entertainment, Tupperware, SunPower Corp, and BlackBerry rode the wave, seeing rises between 6% and 28%. It’s a meme-stock Disneyland; all that’s missing is a catchy theme song.

But where there are winners, there must also be losers. Short-sellers, who had placed bets against GameStop, faced nearly $1 billion in paper losses. As they watched their put options evaporate, one can imagine them whispering sweet nothings to their shrinking portfolios, hoping for a calmer tomorrow.

In response to this insanity, GameStop capitalized on the momentum, successfully raising more than $900 million from a subsequent stock sale. This financial windfall could help the company stave off its current existential crisis, grappling with slowing sales as retail stores desperately try to pivot from selling dusty old game discs to surviving in a digital download world. Cheaper than a new CEO, right?

Keith Gill's YouTube channel, 'Roaring Kitty,' boasts more than 676,000 dormant subscribers. The last post was over three years ago, but like a distinguished duty-bound superhero, Gill resurfaces only when the stock market cries out for his unique brand of chaos.

While retail investors dance in the virtual streets, wiser voices warn of potential risks due to the significant volatility and lack of intrinsic value in meme stocks. Some analysts liken the situation to a "Ponzi scheme" if speculators continue buying and selling purely based on price momentum rather than any semblance of fundamental financial health.

In summary, Keith Gill, aka 'Roaring Kitty,' has pounced again, sending GameStop shares and meme stocks into orbit. While this may bring momentary joy to retail investors and substantial grief to short-sellers, the underlying economic realities haven’t changed. Now, we merely watch and wait to see if this is a triumph of the little guy or just another scene in the ongoing theatrical production that is the modern stock market. Stock tip: Invest in popcorn. You’re going to need it.