(Bloomberg) — Shares of GameStop Corp. rose after the Reddit account that fueled the 2021 meme stock craze posted what appeared to be a $116 million position in the video game retailer on Sunday.
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The June 2 screenshot posted by Keith Gill, who uses a profane name involving the phrase Deep Value on Reddit, showed a holding of 5 million shares at an average cost of $21.27 each. Such a large position would make Gill one of the company’s top five investors and is more than six times the number of shares his account showed in an April 2021 post, the last time he was active on Reddit, when accounting for four-for-one stock split.
The screenshot, which also included 120,000 call options worth $65.7 million expiring on June 21, could not be verified. The options would allow him to buy the shares at $20 each, but would cost about $240 million to exercise. A follow-up post showed his shares are now worth $140 million and options are worth $120 million.
This would add 12 million shares to Gill’s position. That would make him the fourth-largest shareholder, data compiled by Bloomberg show. The combined 17 million shares would be worth $476 million based on GameStop’s closing location on Monday.
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The post was the account’s first in more than three years, mirroring the return of Gill’s X account last month. The reappearance of Gill’s “Roaring Kitty” name on social media platform X kicked off a 271% surge in two days, which was quickly reversed as the craze failed to retain investor interest.
On Monday, GameStop shares jumped 21%, adding about $1.7 billion to its market capitalization, with 164 million shares changing hands.
On X, Gill also posted an image of an inverted card from the game UNO that indicates a player is changing the card’s collection direction. The post attracted more than 10 million views in the 21 hours since it was published, around 8pm on Sunday New York time.
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“The recent renewed interest in meme stocks, coming at a time when major US indices are struggling to reach new highs, is a sign of excessive exuberance and is more likely a negative omen given the growing headwinds in the markets,” said Robert Lea, Bloomberg analyst. Intelligence analyst.
Before Roaring Kitty’s return to X, Gill was silent on social media platforms, including Reddit and YouTube, for over three years. X’s first post on May 12 featuring an image of an approaching video game player fueled expectations that it would quickly return to the market and caused shares to more than triple within days.
In turn, GameStop capitalized on the stock jump, selling 45 million shares to raise about $933 million, in a move that many industry observers called prudent, while also diluting the very investors who piled into the stock. .
The company could execute the same strategy after Monday’s rally, according to Wedbush Securities analyst Michael Pachter. “Lemmings who believe in Roaring Kitty may buy more shares at these prices, but there is nothing fundamental to support a valuation at this level.”
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Over the next week, Gill posted more than 100 times on X, mostly non-GameStop-related videos and GIFs, in a move reminiscent of his activity before the 2021 mania. traders on Reddit in 2021 to buy the shares and fend off short sellers, then arguing that the company was poised to “reinvent itself” as a major gaming hub.
The strategy that Gill and the company’s now-CEO and biggest investor, Ryan Cohen, had praised was mostly unsuccessful. “Here we are, three years later and their strategy has been a failure,” Pachter said. “The company has experienced further declines in revenue and the environment for its core business has deteriorated significantly.”
His posts fueled a surge in GameStop shares of more than 2,000% in early 2021, bringing the meme stock frenzy into broader public consciousness. Gill’s recent X-return triggered another GameStop rally, with shares reaching an intraday peak of nearly $65 in mid-May, only to see shares fall more than 50% by Friday’s close.
On Monday, other stocks favored by retail traders also got a boost. AMC Entertainment Holdings Inc. rose as much as 32%, while Beyond Meat Inc. and Reddit Inc. rose as much as 32%.
GameStop is down 77% from its 2021 intraday peak, even after a surge on Monday. Fellow meme stock darling and movie theater chain operator AMC Entertainment Holdings is down 99% from its high. The huge paper losses led many of the investors who embraced the motto “HODL”, short for “hang in there”, to abandon stock trading.
In an April 16, 2021 Reddit post — his last until recently — Gill posted a screenshot that showed he held 200,000 shares of GameStop, worth about $30.9 million at the time. Since then, the value of his position has more than tripled, despite ups and downs.
Gill’s latest Reddit post appeared on the r/Superstonk subforum, which is “a place for theoretical discussions about GameStop stock.” Reddit’s WallStreetBets, which catapulted the meme stock frenzy to international attention, has been more subdued since the 2021 craze.
–With assistance from Farah Elbahrawy.
(Updates share movement throughout.)
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