Medha Singh
(Reuters) -GameStop shares jumped 21% on Monday after “Growling Kitty” Keith Gill, the stock market powerhouse behind the 2021 retail trading frenzy, returned to Reddit with a post showing he bet $116 million on the embattled video game retailer.
The shares were on track to add $4.6 billion to their market value after rising as much as 75% earlier in the session. About $2.7 billion worth of shares had changed hands by 10:12 a.m. ET (1412 GMT), compared with $2.3 billion in Apple (NASDAQ:) shares, according to LSEG.
It was Gill’s first post in three years on his Reddit account, where screenshots of his bullish trades in GameStop (NYSE:) have sparked a 2021 surge in demand for “meme stocks” – often companies with weak fundamentals that have gained cult popularity thanks to the hype on social networks among retailers.
A screenshot posted Sunday showed GameStop owning 5 million shares, or 1.8% of its public shares. Gill’s last post from April 2021, titled “Final Update,” showed him holding 200,000 shares worth $30.9 million.
Sunday’s announcement also included $65.7 million in call options expiring on June 21 with an exercise price of $20.
The stock ended a volatile month at $23 on Friday, up about 33% since Gill began sharing cryptic messages and memes from his “Roaring Kitty” account on X.com in May, sparking speculation over whether he would resume sharing your trades online after the break.
“Keith Gill is putting his money where his mouth is with his tweets, and some investors are clearly following his lead with renewed interest in meme stocks,” said Ben Laidler, global markets strategist at digital brokerage eToro.
“This has a disproportionate impact on the share price given the short position on the stock coupled with its relatively small market capitalization.”
GameStop was the second most popular stock at retail brokerage Fidelity. Shares of meme company AMC jumped 20%.
Monday’s surge also meant GameStop short sellers could face nearly $1 billion in paper losses, according to data analytics firm Ortex Technologies.
Reuters was unable to verify the screenshot, and Gill did not respond to requests for comment on Reddit or by email.
Shares of Reddit jumped 6.8% and shares of retail brokerage Robinhood (NASDAQ:) jumped 5%.
MAY MEME RALLY
GameStop raised $933 million by selling shares to capitalize on a rally in meme stocks last month that saw shares double in value. Still, the stock is nearly 50% off its May peak and about 70% off its 2021 highs.
“The astonishing numbers may be tempting, but they come with real risks,” said Nigel Green, chief executive of independent financial adviser deVere Group.
The $7 billion company is struggling with slowing sales as its core business of selling new and used video game discs suffers as consumers shift to downloading games digitally or streaming them.
The company is expected to report first-quarter results on June 11. Last month it warned that first-quarter net sales would fall to $872 million to $892 million from $1.24 billion a year ago.