GameStop shares experienced a surge of 68% following the unexpected return of the trader nicknamed Roaring Kitty, who gained fame for his involvement in the meme stock frenzy of 2021. The surge was triggered by a meme posted by Keith Gill on social media platform X, marking his first post in three years. The shares skyrocketed by over 110% and were subject to multiple trading halts due to volatility.
The surge in GameStop shares led to short sellers incurring mark-to-market losses of $1 billion as they had bet against the stock. Short sellers borrow shares, sell them, and hope to repurchase them at a lower price to make a profit. In response to the GameStop frenzy, trading platform Robinhood, which had previously suspended purchases of GameStop and other meme stocks, saw its shares rise by 7%. AMC Entertainment shares also saw a rise of 31% and Reddit shares climbed 13%.
The meme shared by Gill featured a cartoon of a man holding a video game console, with a blue chair and arrow in contrast to a previous version by GameStop with a red chair and arrow. The interpretation of the meme was that things were getting serious. Gill, who goes by “Deepf—ingvalue” on Reddit, was a key player in the WallStreetBets subreddit that drove the massive returns in GameStop’s stock. Retail investors also influenced the surge in other stocks such as AMC Entertainment and Bed Bath & Beyond, collectively known as meme stocks.
During a Congressional hearing in 2021, Gill described himself as a casual trader and denied using social media to manipulate GameStop stock. He believed the stock presented an attractive opportunity for investors and had purchased shares and call options starting in the summer of 2019. Despite his investment thesis, Gill did not anticipate GameStop reaching a high of $483 a share in 2021. A movie titled “Dumb Money” based on the GameStop short squeeze featured a character portraying Gill.
GameStop shares experienced multiple circuit breaker halts due to elevated volatility, and Robinhood denied claims of halting GameStop stock purchases on its platform. The halt in trading was attributed to market-wide exchange trading limits and not specific to Robinhood. Gill’s involvement in the meme stock frenzy highlighted the influence of social media communities on stock prices, leading to wide swings in shares based on popularity rather than fundamentals of the companies. The story is ongoing and continues to develop.
