By Medha Singh, Suzanne McGee and Caroline Valetkevitch
(Reuters) -Shares of GameStop rose 21% on Monday after the stock influencer known as “Roaring Kitty” returned to Reddit with a post showing a $116 million bet on the embattled video game retailer.
Shares of GameStop (NYSE:) closed at $28, after rising as much as 75% during the session. About $4.7 billion worth of GameStop shares had changed hands as of market close, making it the most traded stock on the NYSE, according to LSEG data.
The post was the first in three years from Keith Gill, the Roaring Kitty stock influencer behind the retail trading frenzy of 2021, from his Reddit account. In 2021, screenshots on Reddit of his bullish GameStop trades fueled a surge in demand for “meme stocks” — often companies with weak fundamentals that gained a cult-like following through social media hype among retail traders.
The screenshot posted Sunday showed GameStop holdings of 5 million shares, or 1.8% of publicly available shares. Gill’s last post from April 2021, titled ‘last update’, showed an ownership of 200,000 shares worth $30.9 million.
Reuters was unable to verify the screenshot on Reddit and Gill did not respond to a request for comment on Reddit or email.
Roaring Kitty’s Reddit account announced in a post after the close of regular trading on Monday that he is still holding on to his 5 million shares and 120,000 call options. The value of the position rose to $260 million, an increase of $78.6 million from the previous session.
Sunday’s post also revealed $65.7 million in call options that expire on June 21 at a strike price of $20.
The stock capped a volatile month on Friday, closing at $23.14, up about 33% since Gill began sharing cryptic posts and memes from his “Roaring Kitty” account on would then resume his transactions online. the break.
“Keith Gill is putting his money where his tweets are, and some investors are clearly following his lead and reigniting interest in meme stocks,” said Ben Laidler, global market strategist at digital brokerage eToro.
“This has a disproportionate impact on the share price given the short position in the stock combined with its relatively small market capitalization.”
Monday’s surge puts GameStop short sellers on track to suffer nearly $1 billion in paper losses, according to data and analytics firm Ortex Technologies. The short position in GameStop amounted to 57.6 million shares, or 18.4% of shares outstanding, Ortex data showed. That compares to 162% in 2021, when the stock had its first, dazzling rally.
Garrett DeSimone, head of quantitative research at OptionMetrics, said individual investors likely account for a large portion of GameStop’s recent trading.
But while the rise of GameStop in 2021 saw retail traders unite against Wall Street institutions shorting the stock, the apparent lack of a common enemy could give some investors less reason to stick with their bullish bets this time around. DeSimone said.
“I think retail investors who bought in this morning are probably not going to be too happy with the outcome in the coming days,” DeSimone said.
Some wondered if the original ‘Roaring Kitty’, Keith Gill, was behind the posts.
“When he first posted about GameStop, he was personally front and center,” said Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ:). Now Sosnick and some others are wondering whether another individual or entity took over his account.
“There are still many question marks,” Sosnick said.
Other stocks linked to the meme phenomenon also rose on Monday. AMC shares ultimately rose 11.1%, while Reddit shares rose 2.9%.
MEME RALLY OF MAY
GameStop raised $933 million by selling shares to cash in on a meme stock rally last month, when its shares doubled in value. Still, shares are down sharply from their May peak and down more than 70% from 2021 intraday highs.
The company is struggling with declining sales as its core business of selling new and used video game discs takes a hit as consumers turn to downloading games digitally or via streaming.
The recent interest in GameStop comes as major U.S. stock indexes recently hit record highs.
“If you see these (meme stocks) generating a lot of investor action, I take that as a sign of perhaps too much froth in the markets,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
