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Business News/ Markets / Stock Markets/  GameStop stock soars 74% after 'Roaring Kitty' Keith Gill tweet spurs meme stock frenzy
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GameStop stock soars 74% after 'Roaring Kitty' Keith Gill tweet spurs meme stock frenzy

In 2021, GameStop grappled with survival challenges as the gaming industry rapidly shifted from physical discs to digital downloads. Large Wall Street hedge funds and significant investors were pessimistic about its future, actively shorting its stock.

Roaring Kitty Sparks Meme Stock Surge: Keith Gill's return to social media sends GameStop shares soaring 74%, marking the biggest intraday rise since the 2021 meme stock frenzy.Premium
Roaring Kitty Sparks Meme Stock Surge: Keith Gill's return to social media sends GameStop shares soaring 74%, marking the biggest intraday rise since the 2021 meme stock frenzy.

Keith Gill, known as "Roaring Kitty," the pivotal figure in the 2021 meme stock phenomenon, has resurfaced online after three years, causing a significant surge in GameStop shares, which soared 74%, and other meme stocks.

Gill shared a meme on the social platform X that typically signifies heightened gamer attention, followed by an old YouTube video where he reiterated his support for GameStop, stating, “That’s all for now cuz I’m out of breath. FYI, here’s a quick 4min video I put together to summarize the $GME bull case."

In 2021, GameStop was a floundering video game retailer, struggling against a market shift from physical discs to digital downloads. Many major investors were shorting its stock, anticipating further declines. However, Gill and like-minded retail investors sparked a massive rally by purchasing GameStop stock. This triggered a "short squeeze", and short sellers were compelled to buy shares at rising prices to mitigate losses.

This resurgence was evident on Monday as GameStop shares more than doubled at market opening, closing the day up 74%, marking its most significant intraday rise since the early 2021 meme stock frenzy. This spike also boosted other meme stocks, like AMC, which saw a 78% increase, and smaller gains in companies like Koss Corp. and BlackBerry.

Trading was halted eight times before noon due to the extreme volatility. Gill had become a folk hero on the Reddit forum Wallstreetbets, which initiated a David vs. Goliath scenario against large hedge funds betting against GameStop. This grassroots movement drove GameStop’s stock from below $20 to nearly $400, causing estimated losses of $5 billion for major hedge funds like Citron Research and Melvin Capital, Associated Press reported.

The interest in meme stocks had been rejuvenating earlier this month, with GameStop and AMC posting significant gains. GameStop reported its first annual profit since 2018 earlier this year. However, the long-term success of Ryan Cohen’s plan to pivot the company towards digital sales remains uncertain, the report added.

The short positions against GameStop have notably decreased from over 140% of tradable shares in 2021 to just over 24% now. Despite profiting from the rally, Gill testified in a Congressional hearing that his actions were not aimed at manipulating the stock price, famously remarking, “I like the stock," as per the report.

After stepping away from public forums following a 2021 video, Gill’s influence remains potent in the stock market, as evidenced by the recent trading surge. His story and the broader meme stock saga were dramatized in the film “Dumb Money" last year, the report added.

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Published: 14 May 2024, 08:03 AM IST
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