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A very basic guide to GameStop’s latest stock surge for people who know nothing about finance
GameStop shares soared on Monday, hours after a content creator known as “Roaring Kitty” shared on social media that he had purchased nearly $116 million worth of shares.
The creator, whose real name is Keith Gill, has influenced GameStop’s share prices several times – as recently as last month and most famous in 2021 when Gill led an unprecedented influx of Reddit users to buy GameStop shares in response to the company’s near-bankruptcy filing.
But why is he doing this? How does he have so much influence on the stock market – and is it legal? We detail everything you need to know about the situation, without you needing to know much about finance and the stock market.
🐈 Who is Keith Gill aka ‘Roaring Kitty’?
Gill, 37, worked as a financial trader until 2021. That was the same year he began posting GameStop stock analysis on the Reddit forum r/wallstreetbets, which has 16 million members. He had also invested in shares since 2019, believing they were undervalued.
GameStop, a video game retailer, was struggling to survive at the time because most video game players were switching to digital downloads. With GameStop predicted to go bankrupt, Gill and his Reddit followers bought thousands of shares, which drove up the price of a GameStop share by more than 1,000%.
According to for the Associated Press, GameStop’s “unlikely gains” in 2021 were “the product of a tug of war between small investors and large institutions.” Hedge funds like Citron Research and Melvin Capital lost about $5 billion because they didn’t believe Gill and other Reddit users could continue to drive up the stock price.
The media later dubbed the situation with GameStop “meme stock” – a term to describe a stock that gains popularity solely through social media, especially through platforms like Reddit’s r/wallstreetbets.
The film Dumb Money, based on Gill’s investment in GameStop in 2021, stated that Gill was worth $34 million at the time.
In February 2021, a collective action was brought against Gill alleging that he had committed price gouging. In a virtual congressional hearingGill denied leveraging any social media influence to purposefully increase the share price.
“The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is absurd,” Gill said.
Gill was not fined, but his former employer was forced to pay $4 million for failing to supervise Gill’s online trading and activities.
Gill disappeared from social media in mid-2021, only to return on May 12 with a cryptic tweet to his 1.4 million followers – portraying a meme of a player leaning forward in a chair, to indicate “when things start to get serious” in the game.
📈 Why are GameStop shares rising again?
After Gill posted the gamer meme on X, even without the mention of GameStop or shares, GameStop shares rose again.
On June 2, a Reddit account who is connected to Gill and has not published since April 2021 posted a screenshot from an E-Trade account with GameStop shares. E-Trade is an online trading platform and subsidiary of Morgan Stanley bank.
The post had around 21 thousand comments, with users rooting for Gill’s return and chiming in to say they would be buying GameStop shares the next morning. On June 3, GameStop shares soared 21%.
Gill is now GameStop’s fifth-largest shareholder.
Read more about the details of GameStop’s share price rise by Bloomberg.
🕵️ A big question remains as to whether Gill is really behind this
Unlike GameStop’s rise in 2021, Gill hasn’t posted a single new video showing his face and talking about why he’s making these decisions. His X account only posted GIFs and memes that never explicitly mention GameStop or E-Trade. His screenshots uploaded to Reddit could not be independently verified by other financially focused media outlets such as CNBC It is Bloomberg.
💸 What happens next?
When Gill purchased his GameStop shares, he had a $20 strike price that expires on June 21. So people are just waiting until June 21st to see what happens.
Basically, Gill bet that on June 21 GameStop stock prices will be $20 or more due to the number of people buying them. If this is true, he can continue to buy more shares at $20 while others will have to buy at the increased price, meaning Gill will essentially earn the difference between the increased share price and $20.
If the stock price is less than $20 on June 21, he will lose money.
⚖️ Wait, is this legal?
According to a report from the Wall Street JournalE-Trade is considering kicking Gill off the platform.
Stock manipulation, which aims to deceive investors by intentionally controlling or affecting stock prices, is illegal in most cases because it “undermines the integrity of financial markets,” said a California-based law firm specializing in federal crimes. explained in a blog post.
But stock manipulation can be very difficult for regulators to prove.
As of June 3, no decision has been made about whether to pursue action against Gill. The Wall Street Journal reported that some Morgan Stanley employees were concerned that kicking Gill off the platform would result in his tens of thousands of followers leaving E-Trade.
However, a spokesperson for the Massachusetts Division of Securities told the news outlet that it is also investigating Gill’s activity.