Roaring Kitty rockets GameStop stock with post revealing $116 million stake

Jun 03, 2024

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Brent Jabbour (Senior Producer), Emma Stoltzfus (Video Editor)

GameStop’s stock surged again on Monday, June 3, after meme stock master Keith Gill took to Reddit to share a snapshot of what appeared to be a $116 million stake in the company. The video game retailer’s share price went up more than 80% premarket before settling roughly 30% higher on the day.

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Gill, also known by Roaring Kitty or DeepF—ingValue on Reddit, visited the r/SuperStonk subreddit to share an image that many speculate is his holdings in GameStop.

The image shows 5 million shares in GME valued at $115.7 million as of Friday and a call option with a $20 strike price set to expire June 21.

A call option is a bet that the chosen stock will go above the “strike” price by the expiration date. In this case, if the price goes well above $20 and Gill exercises the option, Gill can collect massive gains after fees.

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The meme-stock movement peaked in early 2021 as retail traders communicating on Reddit invested in companies like GameStop, AMC and RadioShack. GameStop shares exploded more than 1,000% in January 2021, becoming a cultural phenomenon.

Gill’s affinity for the stock manifested in posts on Reddit and his YouTube channel for months before it made headlines.

The GameStop rally with retail traders in the driver’s seat put a short squeeze on some massive hedge funds like Melvin Capital, which had a huge short position on the gaming retailer. The hedge fund lost 49% the first quarter of 2021 and needed a nearly $3 billion injection to help fight off the squeeze.

The situation culminated in retail trading platform Robinhood limiting trading on GameStop. It eventually resulted in congressional hearings and the movie, “Dumb Money.”

Gill disappeared from the public eye for three years before returning with a string of memes in mid-May that sparked a GameStop rally.

Institutional investors are not exactly fans of meme stocks. Given Gill’s considerable social media influence, people continue to debate whether the posts are, or should be, illegal.

Former Securities Exchange Commission (SEC) Chair Jay Clayton weighed in on the situation last time Gill made news in May.

“It’s not insider trading,” Clayton said in an interview with CNBC.
“He’s trading on his own information, that’s why it’s not insider trading. But is this something that we should be tolerating in our markets? Whether it’s legal or illegal, I don’t think so.”

In Gill’s 2021 testimony to Congress, he reiterated his claim that he is a fan of GameStop and said he had never solicited anyone to buy or sell the stock to make a profit.

While there has been some insistence that these antics are tantamount to market manipulation, it doesn’t appear to meet the SEC’s threshold for such a charge.

Tags: Securities and Exchange Commission

[Simone Del Rosario]
GameStop’s stock popped more than 80% before markets opened Monday. But stop me if you’ve heard this before, there are no fundamentals behind the move.

Once again, the latest surge comes courtesy of a post by meme lord Keith Gill, AKA RoaringKitty, AKA deep effing value.

Late Sunday, Gill took to the SuperStonk subreddit to post what users are speculating is his position in the beleaguered video game retailer, and what a position it is.

The image shows 5 million shares worth nearly $116 million last week and 120,000 call options with a $20 strike price set to expire June 21.

A call option bets that a stock will go above the “strike” price by that expiration date. In Gill’s case, if it’s well above $20, he can make a good amount of money after fees. GameStop shares opened at $40 Monday morning.

Gill was an architect of the meme stock craze in 2021, but after a bunch of uproar leading to congressional hearings, documentaries and a feature-length film, he disappeared from the public eye.

But in mid-May, he made his triumphant return on X, posting meme after meme, pushing the GameStop stock to spike 175% before stabilizing.

[Keith Gill]
As for me, I like the stock.

[Simone Del Rosario]
But institutional investors and the like don’t care much for Gill. With his outsized internet influence on meme stock prices, plenty of people are debating whether what he’s doing is illegal or should be illegal. It’s a tough argument to make, he’s not trading on insider information, like I said, there aren’t really fundamentals behind this aside from maybe thinking the stock is undervalued, and he also doesn’t appear to be misleading investors.

Former SEC Chair Jay Clayton weighed in on this the last time Roaring Kitty reared his head a few weeks back.

[Jay Clayton]
“It’s not insider trading. That’s, that’s, that’s clear, and he’s trading on his own information. That’s why it’s not insider trading. But is this, is this something that we should be tolerating in our markets? Whether it’s legal or illegal, I don’t think so. It bothers me. It bothers me on many levels.”

[Simone Del Rosario]

It’s worth pointing out that Clayton says this on a network where people go on TV all the time to say they like a stock.

[Peter in Oklahoma]

“Calling about CEG, Constellation Energy Group, Buy, Sell or Hold.”

[Jim Cramer]

“We like those guys so much, we had em on, this has all the kind of energy I like.

[Simone Del Rosario]

For his part, Gill has long claimed he is just a fan of the company and even pointed out in written testimony that he never solicited anyone to buy or sell the stock for his profit.

Many are crying market manipulation after this latest round. But according to the SEC’s own website, it doesn’t seem to fit the bill. Could you imagine trying to prosecute him in court for posting a drawing of a guy sitting up in a gaming chair?