Written by Medha Singh and Laura Matthews
(Reuters) – Shares of video game retailer GameStop rose 66% on Monday after “Roaring Kitty,” the financial social media influencer credited with sparking the meme stock rally of 2021, returned to X.com after a long hiatus. Three years for application.
GameStop shares reached an 18-month high of $38.20 and were stopped several times due to volatility. They were on track for their biggest single-day percentage gain since 2021.
The Grapevine, Texas-based company’s rise also boosted other meme stocks that have taken a beating over the past year. Theater chain AMC shares jumped 48%, while headphone maker Koss Corp jumped 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 21-fold over two weeks in January 2021 before… It falls to pre-surge levels in subsequent days.
On Sunday, Gill posted a sketch of a man leaning forward in a chair, a popular meme among gamers that suggests things are getting serious. The post did not mention GameStop.
The cryptic post is his first on X, formerly known as Twitter, after being noticeably 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 actively traded stocks among retail investors at 11 a.m. EST, JPMorgan data showed.
Roaring Kitty “seems to be the most likely suspect for renewed interest today… but I would be careful not to label participants in this phenomenon as investors,” said Art Hogan, chief market strategist at BP Riley Wealth.
“There is no fundamental change in any of the companies where this phenomenon is widespread.”
GameStop in March cut an unspecified number of jobs to cut costs and reported lower fourth-quarter revenue.
Shares of the struggling video game retailer rose more than 57% in May through Friday’s close, but are still sharply below their $120 peak of 2021. With today’s gains, the stock’s market cap now stands at about $9 billion, but at its peak Its value was about $37 billion.
“You’re unlikely to see a repeat of the meme stock mania for any sustained period of time because it was a point in time when a bunch of people were stuck at home with free money and that’s no longer the case,” he said. Thomas Hayes, Chairman of Great Hill Capital LLC.
The meme stock’s 2021 rally was sparked by Gill’s posts in Reddit’s Wallstreetbets discussion group about gains he made from his investments in the highly exposed company.
The rally extended to other highly shorted stocks, including AMC, as Reddit users banded together to put pressure on bearish hedge funds, costing them billions in losses and attracting scrutiny from US regulators.
The entire episode inspired Craig Gillespie’s 2023 film “Dumb Money.”
Short selling and options activity
GameStop has about a quarter of its publicly available shares in a short position, and pessimistic investors are expected to lose $1.23 billion on paper on Monday, analytics firm Ortex said.
Short sellers typically sell borrowed shares in the hope of making a profit by buying them back later when the price falls. A Berlin-based trader confirmed that there were no GameStop shares available for borrowing on Monday on the Interactive Brokers trading platform.
Meanwhile, options activity in stocks has been on the rise since the beginning of May.
Open interest in call options reached 588,205 on May 10, the highest level this year, before falling slightly on Monday to 501,296, according to TradeAlert data.
“Institutions looking at GameStop from the short side will remember what happened in 2021 and will likely look the other way this year,” 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 Ganguly and Michael Ehrman)
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