By Medha Singh
(Reuters) -GameStop shares jumped 21% on Monday after “Roaring Kitty” Keith Gill, the stocks influencer behind the 2021 retail trading frenzy, returned to Reddit with a post showing a $116 million bet on the embattled videogame retailer.
The stock was set to add $4.6 billion to its market value after surging as much as 75% earlier in the session. Roughly $2.7 billion worth of shares changed hands by 10:12 a.m. ET (1412 GMT), compared with $2.3 billion in Apple (NASDAQ:), according to LSEG data.
It was Gill’s first post in three years from his Reddit account, where screenshots of his bullish GameStop (NYSE:) trades triggered a rush of demand in 2021 for “meme stocks” – often companies with weak fundamentals that gained a cult-like following through social media hype among retail traders.
The screenshot posted on Sunday showed a GameStop holding of 5 million, or 1.8% of its publicly available stock. Gill’s last post from April 2021, titled “final update”, showed a holding of 200,000 shares worth $30.9 million.
Sunday’s post also revealed $65.7 million worth of call options expiring on June 21 at a strike price of $20.
The stock wrapped up a volatile month at $23 on Friday, about 33% higher since Gill began sharing cryptic posts and memes from his “Roaring Kitty” account on X.com in May, sparking speculation over whether he would resume sharing his trades online after the hiatus.
“Keith Gill is putting his money where his tweets are, and some investors are clearly following his lead and rekindling interest in meme stocks,” said Ben Laidler, global markets strategist at digital brokerage eToro.
“This is having a disproportionate share price impact given the short position in the stock combined with its relatively small market capitalisation.”
GameStop was the second-most traded stock on retail brokerage Fidelity. Fellow meme stock AMC jumped 20%.
Monday’s surge also put GameStop short sellers on track to rack up nearly $1 billion in paper losses, according to data and analytics firm Ortex Technologies.
Reuters could not verify the screenshot and Gill did not respond to a request for comment on Reddit or email.
Reddit shares jumped 6.8%, while retail trader-focused brokerage Robinhood (NASDAQ:) gained 5%.
MAY’S MEME RALLY
GameStop raised $933 million by selling shares to cash in on a meme stock rally last month, when the stock doubled in value. Still, shares are nearly 50% below their May peak and down about 70% from 2021 highs.
“The eye-watering numbers might be tempting, but there are real risks involved,” said Nigel Green, chief executive at independent financial advisor deVere Group.
The $7 billion company has been grappling with slowing sales as its core business of selling new and pre-owned videogame disks takes a hit from consumers moving to downloading games digitally or streaming.
It is expected to post first-quarter results on June 11. Last month, it warned that first-quarter net sales would drop to between $872 million and $892 million, from $1.24 billion a year ago.
Read the full article here
