GameStop takes off as flag bearer 'Roaring Kitty' reemerges, meme stock soars


By Medha Singh and Laura Matthews

(Reuters) -Shares of video game retailer GameStop surged 66% on Monday after “Roaring Kitty,” the social media finance influencer credited with fueling the 2021 meme stock rally, left the app after a three-year hiatus. Returned to X.com.

GameStop shares reached an 18-month high of $38.20 and were halted several times due to volatility. They were on track for their sharpest one-day percentage gain since 2021.

The Grapevine, Texas-based firm's rally also gave a boost to other meme stocks that have suffered over the past year. Theater chain AMC jumped 48%, while headphone maker Koss Corp surged 32%.

Keith Gill, known as “Roaring Kitty” on YouTube and “DeepF***ingValue” on Reddit, was a key figure in the so-called Reddit rally, which saw GameStop shares rise as much as 21x in two weeks Went. January 2021 before falling to pre-surge levels in the following days.

Gill on Sunday posted a sketch of a man leaning forward in a chair, a popular meme among gamers that indicates things are getting serious. GameStop was not mentioned in the post.

The cryptic post is his first post on X, formerly known as Twitter, after being notably absent from the social media platform 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 shows.

Art Hogan, chief market strategist at B. Riley Wealth, said, “Roaring Kitty appears to be the most likely suspect for the renewed interest today… but I would be careful not to characterize event attendees as investors. Go.”

“There has been no fundamental change in any of the companies that became popular in this incident.”

GameStop cut an unspecified number of jobs in March to reduce costs and reported lower revenue in the fourth quarter.

Shares of the struggling videogame retailer are up more than 57% in May as of Friday's close, but are still well below their 2021 peak of $120. With today's gains, the stock's market cap is now about $9 billion, but that was at its peak. Which is worth approximately $37 billion.

“It's unlikely that you're going to see a repeat of the meme stock mania for any sustained period because this was a time when you had a bunch of people stuck at home with free money and that's not the case anymore,” he said. Said. Thomas Hayes, President of Great Hill Capital LLC.

The meme stock rally in 2021 was sparked by Gill's post on Reddit's WallStreetBets discussion group, in which he touted the profits he made on his investment in the heavily shorted firm.

The rally spread to other heavily shorted stocks including AMC as Reddit users banded together to squeeze bearish hedge funds, costing them billions in losses and drawing scrutiny from US regulators.

The entire episode inspired Craig Gillespie's 2023 film “Dumb Money”.

Short Selling and Options Activity

Analytics firm Ortex said nearly a quarter of GameStop's publicly available shares were held in short positions and bearish investors stood to lose $1.23 billion on paper on Monday.

Short sellers typically sell borrowed stocks in the hope of making a profit by buying them back later when the price falls. On Monday, a Berlin-based trader confirmed that there were no GameStop shares available for borrowing on trading platform Interactive Brokers.

Meanwhile, options activity on the stock has been increasing since the beginning of May.

Open interest in call options peaked at 588,205 on May 10, the highest level this year, before falling slightly to 501,296 on Monday, according to TradeAlert data.

“Institutions that looked at GameStop briefly will remember what happened in 2021 and will be more likely to hold it out,” said Chris Murphy, co-head of derivatives strategy at Susquehanna.

(Reporting by Medha Singh in Bengaluru; Additional reporting by Pranab Kashyap, Shruti Shankar, Akash Sriram and Srishti Achar; Editing by Shinjini Ganguly and Michael Erman)

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