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GameStop Soars as Flag-Bearer ‘Roaring Kitty’ Resurfaces, Triggers Rally in Meme Stocks
By Medha Singh and Laura Matthews
(Reuters) – Shares of video game retailer GameStop rose nearly 75% on Monday after “Roaring Kitty,” an account associated with a financial social media influencer who has been credited with sparking the meme stock’s 2021 rally, returned to X.com after a three-year hiatus from the app.
GameStop shares hit an 18-month high at $38.20 and have been halted several times due to volatility. They recorded their biggest one-day percentage gain since January 2021.
The Grapevine, Texas-based company’s recovery has also boosted other meme stocks that took a hit last year. Theater chain AMC jumped 78%, while headphone maker Koss Corp rose 37%. Hertz Global rose nearly 12%, while Reddit Inc rose nearly 9%.
Keith Gill, known as “Roaring Kitty” on YouTube and “DeepF***ingValue” on Reddit, was a key figure in the so-called Reddit rally that saw GameStop shares rise as much as 21-fold in two weeks in January 2021, before falling to pre-surge levels in subsequent days.
The Roaring Kitty account on Sunday posted a sketch of a man leaning forward in a chair, a popular meme among gamers that indicates things are getting serious.
On Monday, the account posted clips from films including an episode of “The Avengers,” the 1993 western “Tombstone” and the 1980s comedy “Ferris Bueller’s Day Off.”
None of the posts mentioned GameStop.
The cryptic posts were Roaring Kitty’s first posts on X, formerly known as Twitter, in years. Social media accounts associated with Gill have been silent since mid-2021.
Gill did not immediately respond to a Reuters request for comment.
GameStop and AMC were the most traded stocks among retail investors at 11 a.m. ET, JPMorgan data showed.
Roaring Kitty “seems to be the most likely suspect of the renewed interest today…but I would be careful not to characterize participants in this phenomenon as investors,” said Art Hogan, chief market strategist at B Riley Wealth.
“There is no fundamental change in any of the companies that are popularizing this phenomenon.”
GameStop in March cut an unspecified number of jobs to cut costs and reported lower fourth-quarter revenue, causing it to fall 14% after its earnings announcement. The company had a total of 4,169 stores as of February 3, compared to 4,413 in January last year.
Shares of the struggling video game retailer were up nearly 175% in May through Monday’s close, but still remain sharply below 2021’s $120 peak. With today’s gains, shares now have a market cap of about $9 billion, but at their peak they were worth it. around US$37 billion.
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“You’re unlikely to see a repeat of the meme stock craze for an extended period of time because it was a time when you had a lot of people stuck at home with free money and that’s no longer the case,” he said. Thomas Hayes, President of Great Hill Capital LLC.
The 2021 meme stock rally was triggered by Gill’s posts on Reddit’s Wallstreetbets discussion group about the gains he made on his investments in the heavily shorted company.
The rally spread to other heavily shorted stocks, including AMC, as Reddit users banded together to put pressure on bearish hedge funds, costing them billions in losses and drawing scrutiny from U.S. regulators.
The entire episode inspired Craig Gillespie’s 2023 film “Dumb Money.”
SHORT SALES AND OPTIONS ACTIVITY
GameStop has about a quarter of its publicly available shares shorted and bearish investors are expected to lose $1.23 billion on the stock on Monday, analytics firm Ortex said.
Short sellers typically sell borrowed shares in hopes of making a profit by repurchasing them later when the price drops. As of Monday, no GameStop shares were available for lending on the Interactive Brokers trading platform, a Berlin trader confirmed.
Meanwhile, stock option activity has been increasing since the beginning of May.
Open interest in call options reached 588,205 on May 10, the highest this year, before retreating slightly on Monday to 501,296, according to data from TradeAlert.
“Institutions looking at GameStop from the short side will remember what happened in 2021 and will be more likely to sit on the sidelines,” said Chris Murphy, co-head of derivatives strategy at Susquehanna.
(Reporting by Medha Singh in Bengaluru; Additional reporting by Pranav Kashyap, Sruthi Shankar, Akash Sriram and Shristi Achar; Editing by Shinjini Ganguli and Michael Erman)