Finance

GameStop, AMC soar more than 70% each as ‘Roaring Kitty’ meme trader resurfaces

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A man passes by a GameStop location on 6th Avenue in New York, March 23, 2021.
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GameStop shares rallied more than 37% in premarket trading Monday after “Roaring Kitty,” the man who inspired the epic short squeeze of 2021, posted online for the first time in roughly three years.

The post, a picture on X of a video gamer leaning forward on their chair as if to indicate he’s taking the game seriously, marked Roaring Kitty’s first post on the platform — or on Reddit— since 2021.

Roaring Kitty, whose legal name is Keith Gill, is a former marketer for Massachusetts Mutual Life Insurance. Gill, who goes by DeepF——Value on Reddit, drew an army of day traders who cheered each other on and piled into the brick-and-mortar video game stock, and GameStop call options, between 2020 and 2021.

The “meme stock” frenzy involved individual investors taking aim at short sellers and hedge funds who were pessimistic about the outlook for GameStop and other companies, forcing them to cover their short positions and drive up the price of the target stocks.

The poster child was hedge fund Melvin Capital, which was heavily shorting GameStop and became a target of the army of amateur traders, suffering huge losses that prompted an arm of Ken Griffin’s Citadel, as well as Point72, to backstop Melvin’s finances with close to $3 billion in support.

The GameStop mania that drove its stock above $120 a share, split-adjusted, in early 2021 from as little as $3 in the space of three months, forced brokerages including Robinhood to limit trading in heavily shorted stocks. In response, one Robinhood user filed a class-action lawsuit following the app’s decision to restrict GameStop trading on its platform. The suit was dismissed in August 2023.

Another class-action lawsuit brought against Gill alleged that he pretended to be a novice trader despite being a licensed professional.

The volatility spawned a series of Congressional hearings around brokers’ practices and gamifying retail trading, and testimony from leaders of Robinhood, Melvin Capital, Reddit and Citadel, as well as Gill. The entire episode finally inspired the 2023 movie “Dumb Money,” in which Paul Dano played Gill.

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In January 2021, GameStop shares hit an all-time high of $120.75 intraday, adjusted for a subsequent 4-for-1 stock split in the summer of 2022. But as interest from individual investors eventually faded, the stock collapsed along with other meme stocks such as AMC Entertainment Holdings. GameStop last month hit a three-year low of $9.95.

Recently, the stock has started to move higher, which may have rekindled Gill’s interest. The stock is up 57% so far in May and closed Friday at $17.46.

However, GameStop’s most recent earnings report showed a discouraging picture at the video game company. In late March, the firm said it had cut an unspecified number of jobs to reduce costs and reported lower fourth-quarter revenue amid rising competition from e-commerce firms.

GameStop posted revenue of $1.79 billion for the fourth quarter, compared with $2.23 billion in the same quarter a year earlier.

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