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GameStop, AMC Stocks Rise on Roaring Kitty’s Return
The man at the center of the pandemic meme stock craze appeared online for the first time in three years, sending prices of these quirky and volatile stocks rising sharply on Monday.
Keith Gill, better known as “Roaring Kitty,” posted an image Sunday on the social platform X of a man sitting forward in his chaira meme used by gamers when things are getting serious.
He followed that tweet with a YouTube video from years earlier when he defended the beleaguered company GameStop by saying, “That’s all for now because I’m out of breath. FYI, here’s a quick 4 minute video I made to summarize the $GME bull case.
GameStop in 2021 it was a video game retailer struggling to survive as consumers quickly switched from discs to digital downloads. Big Wall Street hedge funds and major investors were betting against it, or shorting its shares, believing that its shares would continue a drastically downward trend.
Gill and those who agreed with him changed the trajectory of a company that appeared to be on the brink of bankruptcy by buying thousands of shares of GameStop in the face of almost every accepted metric that told investors the company was in serious trouble.
This began what is known as a “short squeeze,” when large investors who had bet against GameStop were forced to buy its fast-growing shares to offset their huge losses.
At Monday’s opening, it appeared that Gill had reignited the phenomenon, as GameStop shares more than doubled. They closed Monday up 74%. It’s the biggest intraday trading jump for GameStop since the meme craze of early 2021. Other meme stocks, such as theater chain AMC, also rose.
Trading in GameStop was halted eight times before noon on Monday due to volatility.
Gill became a cause célèbre in 2021 after her posts on Reddit’s Wallstreetbets subcategory started a David versus Goliath battle with major hedge funds betting heavily against GameStop’s survival.
The little guys won, at least for a while, sending shares of GameStop up more than 1,000% in 2021 and other meme stocks as well. The struggling AMC movie theater chain jumped 2,300% in a short space of time in the same year.
Some big traders posted colossal losses as GameStop rose from less than $20 to close to $400 apiece. Citron Research, Melvin Capital and other well-known hedge funds lost around US$5 billionaccording to analytics firm S3 Partners.
Some of these new, smaller investors believed, at least in part, that Ryan Cohen, co-founder of Chewy.com, could take the traditional retailer in a more online direction. Cohen built a stake in GameStop before joining the board and last year becoming its CEO.
Joining the surge in memes on Monday was AMC Entertainment Holdings Inc., which jumped 78%. Headphone maker Koss Corp. rose 37% and BlackBerry, once the dominant smartphone maker, rose 7%. Retailer Bed, Bath & Beyond, another meme stock, sought bankruptcy protection last year.
Some meme stocks, including GameStop and AMC, rose quickly earlier this month.
Shares of GameStop Corp., which have been falling steadily since 2021, had already risen 57% this month. In January, GameStop reported its first annual profit since 2018, although it remains unclear whether Cohen’s turnaround plan will be successful.
AMC Entertainment Holdings Inc. is up 10% in the last 30 days.
These companies emerged on Monday following Gill’s tweet.
However, the market dynamics when it comes to companies like GameStop have changed.
When Gill and an online army of retail investors began buying GameStop shares, more than 140% of the company’s tradable shares were being sold short. This skewed number was arrived at because some traders were borrowing against already shorted stocks to make even bigger bets against the company, greatly increasing their losses when the stock began to rise.
Short positions against GameStop’s tradable shares now stand at just above 24%, slightly above the 22.5% recorded in January.
Gill made a large profit by investing in a struggling video game company, but denied it when appeared virtually at a congressional hearing that he used social media to boost GameStop’s stock price.
He simply told lawmakers at the time, “I like the actions.”
As Roaring Kitty, Gill disappeared from message 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”.