A man walks past a GameStop store on 6th Avenue in New York City on March 23, 2021.
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GameStop The stock surged more than 40% Monday after “Roaring Kitty,” the man who inspired 2021’s epic short squeeze, posted online for the first time in about three years.
FastX’s image of a video gamer leaning forward in a chair, as if to show that he was serious about the game, marked Roaring Kitty’s first post on the platform – or on Reddit– from 2021.
Roaring Kitty, whose legal name is Keith Gill, is a former marketer for Massachusetts Mutual Life Insurance. Gill, also known as DeepF ——Value on Reddit, assembled an army of day traders who cheered each other on and invested in generic video game stocks and GameStop call options between 2020 and 2021.
“stock of memesThe frenzy gripped individual investors who targeted short sellers and hedge funds that were pessimistic about the prospects for GameStop and other companies, forcing them to cover their short positions and push up the price of the target shares. Currently, the short position in GameStop shares represents more than 24% of all its shares that are publicly available for trading, also known as float.
The poster child was hedge fund Melvin Capital, which actively shorted GameStop and became the target of an army of amateur traders, suffering huge losses, leading to Ken Griffin’s Citadeland Tochka72to bolster Melvin’s finances, providing approximately $3 billion in support.
The GameStop mania, which sent its shares above $120 a share in early 2021, adjusted for a split from $3 a share within three months, has forced brokerages including Robin Hood 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 lawsuit was dismissed in August 2023.
Another class action lawsuit brought against Gill alleged that he pretended to be an aspiring trader despite being a licensed professional.
The volatility has sparked a series of congressional hearings into brokerage practices and gamification of retailand testimony from leaders of Robinhood, Melvin Capital, Reddit and Citadel, as well as Gill. The whole episode finally inspired the 2023 movie.”Dumb money“, in which Paul Dano played Gill.
5-year GME chart
In January 2021, GameStop shares hit an all-time intraday high of $120.75, adjusted for a subsequent 4-for-1 stock split in the summer of 2022. But when interest from individual investors eventually faded, the stock collapsed along with other meme stocks. such as AMC Entertainment Holdings. GameStop hit a three-year low of $9.95 last month.
The stock has started to rally recently, which may have reignited Gill’s interest, as well as the huge amount of short interest in the stock. GameStop’s price rose 57% in May, closing at $17.46 on Friday.
However, GameStop’s fundamental business, as reflected in its latest earnings report, paints a dismal picture for the video game company. In late March, GameStop said it cut an unspecified number of jobs to cut costs and reported lower fourth-quarter revenue amid growing competition from e-commerce rivals.
GameStop reported fiscal fourth-quarter revenue of $1.79 billion, down from $2.23 billion in the same quarter a year earlier.