Man Known as “Roaring Kitty” Resurfaces, Sparks Surge in Meme Stock GameStop
The man at the center of the pandemic meme stock craze, Keith Gill, popularly known as “Roaring Kitty,” has made his first online appearance in three years. Gill, who gained fame through his posts on the Reddit subcategory Wallstreetbets, recently posted an image on social media, causing the prices of quirky and volatile shares to soar.
Roaring Kitty’s Impact on GameStop
Gill, together with advocates who shared his sentiments, defied conventional metrics and bought thousands of GameStop shares, a struggling video game retailer. This move challenged the bets placed by big Wall Street hedge funds and major investors who had bet against the company’s survival. The result was a “short squeeze,” forcing these investors to buy the rapidly rising GameStop shares to offset their substantial losses. Gill’s actions on social media platforms, therefore, had a profound impact on the stock’s value.
The Phenomenon Resurfaces
The recent appearance of Gill online seems to have reignited the frenzy around meme stocks. At Monday’s opening bell, shares of GameStop more than doubled, closing the day with a 74% increase. AMC Entertainment Holdings Inc., the struggling movie theater chain, also experienced a significant surge of 78%. Similarly, other meme stocks like Koss Corp. and BlackBerry witnessed remarkable jumps. The volatile nature of the market led to multiple halts in GameStop’s trading due to the surge in volatility.
The “David vs. Goliath” Battle
Gill’s decisions and actions sparked a “David vs. Goliath” battle, pitting small retail investors, represented by Wallstreetbets, against large hedge funds. These everyday investors amassed substantial profits, causing share prices of GameStop and other meme stocks, such as AMC, to increase exponentially—GameStop alone soared over 1,000% in 2021. Big traders, such as Citron Research and Melvin Capital, suffered colossal losses, reportedly amounting to an estimated $5 billion. This unexpected turn of events marked a victory for the small investors and signaled a disruptive shift in the dynamics of the market.
Gill’s Influence and GameStop’s Future
Part of the belief in GameStop’s potential revival stemmed from the involvement of Ryan Cohen, co-founder of Chewy.com. Cohen’s push to transform the traditional retailer by embracing an online direction attracted new and smaller investors. Cohen eventually joined GameStop’s board and became its CEO in the previous year. While GameStop reported its first annual profit in 2018, the success of Cohen’s turnaround plan remains uncertain.
Expanding Influence
The ripple effect of Gill’s online presence extended beyond GameStop and AMC. Concurrent with the rise of meme stocks’ values, several other companies experienced significant jumps in their share prices as well. This included Koss Corp., a headphone manufacturer, and BlackBerry, a once-dominant smartphone maker. Additionally, the meme stock phenomenon also affected retailers like Bed, Bath & Beyond, which faced their own financial challenges, seeking bankruptcy protection in the previous year.
The Vanishing Act and Roaring Kitty
Gill, also known as Roaring Kitty, seemingly disappeared from messaging boards after posting a video depicting kittens going to sleep. However, the story of Roaring Kitty’s role in the meme stock craze became the subject of a movie called “Dumb Money.” Despite his prominent profile in the GameStop saga, Gill, when virtually present at a Congressional hearing, denied using social media platforms to drive up GameStop’s stock price, stating simply, “I like the stock.”
Changing Dynamics
The game has shifted for companies like GameStop. Prior to the surge initiated by Gill, more than 140% of the company’s tradeable shares were being shorted. Distorted numbers were a result of certain traders borrowing shares to further escalate the bets against the company, amplifying their losses when the stock price began to rise. Currently, the short positions against GameStop’s shares stand at just over 24%, only slightly more than the 22.5% recorded in January, indicating a change in the market dynamics.
As of now, the resurgence of Roaring Kitty and his influence on GameStop has reignited the surge in meme stocks, leaving investors and analysts curious about the future. The meme stock craze further adds to the ever-changing dynamics and unpredictability of the stock market.