Shares of videogame retailer GameStop jumped more than 50 per cent in early trading on Monday after “Roaring Kitty,” a former marketer at an insurance firm credited with sparking the 2021 meme stock rally, returned to X.com after a three-year hiatus from social media.
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 shares of GameStop surge as much as 21-fold over two weeks in January 2021 before crashing to pre-surge levels in the subsequent 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. It is his first post on X, earlier Twitter, after being notably absent on social media platforms since mid-2021.
“Roaring Kitty” did not immediately respond to a Reuters request for a comment.
GameStop was trending on investor-focused social media stocktwits.com on Monday, indicating interest from individual investors, while Roaring Kitty and retail trading platform Robinhood were trending on X.com.
Roaring Kitty “seems to be the most likely suspect for the renewed interest today… but I would be careful not to characterize the participants in this phenomenon as investors,” said Art Hogan, chief market strategist at B Riley Wealth.
“There’s no fundamental change in any of the companies that are popularized in this phenomenon.”
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GameStop in March cut an unspecified number of jobs to reduce costs and reported lower fourth-quarter revenue.
The company has about a quarter of its publicly available shares in short position and the bearish investors were set to lose $437 million on paper on Monday, analytics firm Ortex said.
Short sellers typically borrow stocks to sell them and make a profit by buying back later when the price falls. On Monday, no GameStop shares were available for borrowing on trading platform Interactive Brokers, a Berlin-based trader confirmed.
Shares of the struggling videogame retailer have surged over 57 per cent so far in May, but still remain 80% below the peak of 2021.
“It’s unlikely you’re going to see a repeat of meme stock mania for any sustained period of time because the conditions are different. It was a point in time when you had a bunch of people stuck at home with free money and nothing to do and that’s no longer the case,” said Thomas Hayes, chairman at Great Hill Capital LLC.
The meme stock rally in 2021 was set off by Gill’s posts on Reddit’s Wallstreetbets discussion group about the gains he had made on his investments in the highly shorted firm that drove a surge of interest in GameStop.
The rally spread to highly shorted stocks including AMC as Reddit users banded together to squeeze hedge funds who had bet against GameStop and other firms.
The battle between Wall Street and Main Street also prompted U.S. regulatory scrutiny, under which Gill was ordered to testify before the U.S. Congress alongside U.S. hedge fund managers.
It also inspired Craig Gillespie’s movie “Dumb Money” that was released last year.
(Reporting by Medha Singh in Bengaluru; additional reporting by Pranav Kashyap, Sruthi Shankar, Akash Sriram and Shristi Achar; Editing by Shinjini Ganguli)
