Yahoo Finance GameStop Shares Surge as Gill’s Reddit Return Shows Huge Bet
(Bloomberg) -- GameStop Corp. shares surged after the Reddit account that drove the meme-stock mania of 2021 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 goes by a profane handle involving the phrase Deep Value on Reddit, showed a stake of 5 million shares with an average cost basis of $21.27 apiece. A position that large would make Gill one of the company’s five biggest investors and is more than six times the number of shares his account showed in an April 2021 post, the last time it was active on Reddit, when accounting for a four-for-one stock split.
The screenshot, which also included 120,000 call options worth $65.7 million due to expire on June 21, couldn’t be verified. The options would allow him to buy the stock at $20 a share, but would cost him some $240 million to exercise. A follow-up post showed his shares are now worth $140 million and the options carry a $120 million value.
Doing so 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 where GameStop closed on Monday.
Read more: Gill’s Purported GameStop Options Would Net Him $170 Million
The post was the account’s first in more than three years, mirroring a return for Gill’s X account just last month. The reappearance of Gill’s “Roaring Kitty” handle on social-media platform X jumpstarted a 271% two-day surge that was quickly reversed as the mania failed to retain investor interest.
On Monday, GameStop shares jumped 21%, adding some $1.7 billion to its market capitalization, as 164 million shares changed hands.
On X, Gill also posted an image of a reverse card from the game UNO that indicates a player is changing the card-pickup direction. The post had attracted more than 10 million views in the 21 hours since its publication at about 8 p.m. Sunday New York time.
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“Recent renewed interest in meme stocks, coming as the main US indices struggle to make new highs, is a sign of excessive over-exuberance and is more likely a negative portent given the rising headwinds in the markets,” said Robert Lea, a Bloomberg Intelligence analyst.
Before Roaring Kitty’s return to X, Gill had been silent across social media platforms including Reddit and YouTube for more than three years. The first X post on May 12 with an image of a video gamer leaning in, fueled anticipation he’d make a swift return to the market and drove shares to more than triple in days.
In turn, GameStop capitalized on the stock’s jump, selling 45 million shares to raise roughly $933 million in a move that many industry watchers perceived as prudent while diluting the very investors that piled into the stock.
The company could execute the same strategy after Monday’s rally, according to Wedbush Securities analyst Michael Pachter. “The lemmings who believe in Roaring Kitty might buy more stock at these prices, but there is nothing fundamental to support a valuation at this level.”
Read this next: The Stock Market After GameStop (Again)
Over the following week, Gill posted more than 100 times on X, mostly videos and GIFs that were unrelated to GameStop, in a move reminiscent of his activity in the lead up to the 2021 mania. In his initial foray as a meme-stock influencer, Gill rallied day-traders on Reddit in 2021 to buy the stock to push back on short sellers, arguing then that the company was poised to “reinvent” itself as a premier gaming hub.
The strategy that Gill and the company’s now-chief executive officer and largest investor Ryan Cohen had touted have mostly been unsuccessful. “Here we are three years later and his strategy was a bust,” Pachter said. “The company has seen further revenue declines, and the environment for its core business has deteriorated significantly.”
His posts fueled a rise in GameStop shares of more than 2,000% in early 2021, bringing the meme-stock frenzy into the broader public consciousness. Gill’s recent X return triggered another GameStop rally, with the stock hitting a nearly $65 intraday peak in mid-May, only to have shares then fall more than 50% through 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. were also stronger.
GameStop is down 77% from a 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 a high. The massive paper losses have driven many of the investors who embraced the “HODL” motto, short for “hold on for dear life,” to bail on trading the stocks.
In an April 16, 2021 Reddit post — his last until recently — Gill posted a screenshot that showed he held 200,000 GameStop shares, worth about $30.9 million at the time. Since then, the value of his position has more than tripled, despite the 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 capture international attention, has been more heavily moderated since the 2021 craze.
--With assistance from Farah Elbahrawy.
(Updates share movement throughout.)
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