In a stunning turn of events, GameStop shares soared by 74% on Monday, causing short-sellers to lose nearly $1 billion. This unexpected rally was seemingly sparked by the return of 'Roaring Kitty,' an influential internet persona who had previously incited a wave of retail investors to buy into the gaming stock in 2021.
Keith Gill, better known by his online moniker 'Roaring Kitty,' posted a picture on social media of a video gamer leaning forward on their chair, a move interpreted by many as a signal that he's back in the game. This was Gill's first post since 2021, and it quickly ignited a frenzy among his followers. The post garnered nearly 100,000 likes and was viewed 20 million times by Monday evening.
According to data from S3 Partners, the surge in GameStop's stock resulted in a mark-to-market loss of $838 million for short-selling hedge funds. "Expect short covering in this stock as it already had a 100/100 squeeze score prior to today's trading," said Ihor Dusaniwsky, S3 managing director of predictive analytics.
The 'meme stock' phenomenon, which Gill played a significant role in, involves individual investors targeting short sellers and hedge funds who are bearish about the prospects of companies like GameStop. This forces them to cover their short positions, driving up the price of the targeted stocks. Currently, the short position in GameStop shares is more than 24% of all its shares that are freely available to trade, also known as the float.
Peter Atwater, the president of consulting firm Financial Insyghts, likened Roaring Kitty's posts to "a match on dry tinder" for his fervent followers. "It doesn’t take much, if the crowd descends, to push the price wickedly in one direction," Atwater said.
Despite struggling with dwindling sales for years, GameStop's stock closed at $30.45 on Monday, up 74% after being halted multiple times. The company, which recently cut an unspecified number of jobs to reduce costs, now has a market value of more than $9 billion.
Gill, a 37-year-old former employee at Massachusetts Mutual Life Insurance, was a key figure in the meme stock rally that saw GameStop's value spike more than 2,000% in the early months of 2021. His personal windfall from the rally was never disclosed, but his GameStop stake was worth nearly $48 million at its peak.
The meme stock rally drew intense scrutiny, leading to Congressional hearings in February 2021. Gill, who also posted as “DeepF—kingValue” on Reddit’s “Wall Street Bets” forum, was the star witness. He argued that social media platforms were "leveling the playing field" for investors.
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