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GameStop stock soars after ‘Roaring Kitty’ reveals $175 million bet on the retailer

GameStop (GME) stock jumped 21% on Monday after user “DeepF***ingValue, an account believed to be linked to individual investor Keith Gill – who sparked the meme stock rally in 2021 – posted a screenshot to Reddit on Sunday evening that purported to show that they paid nearly $175 million to create a position in the video game retailer.

GameStop gained as much as 75% at market open before paring its gains throughout the session. Shares closed at $28 each on Monday.

Gill is also known as Roaring Kitty on X and YouTube. The user posted the screenshot on Sunday evening to Reddit’s Superstonk subreddit.

The screenshot shows holdings of 5 million GameStop shares purchased at an average price of $21.274, a position worth $115.7 million at Friday’s closing price of $23.14. GameStop shares were trading at $38 each in early trading Monday before being temporarily suspended due to volatility.

The account also appears to hold 120,000 options contracts that expire on June 21. These contracts grant the right to buy GameStop shares at $20 each, a position worth $65.7 million as of Friday’s close.

Steve Sosnick, chief strategist at Interactive Brokers, warned investors against continuing the rally.

“Is whoever controls this account doing this in your best interest or in their best interest? And, really, you should think about that because, to me, it (is) pretty obvious who that is,” Sosnick told Yahoo Finance on Monday.

“If you are chasing stocks here, you are more than likely the source of liquidity allowing whoever controls this account to sell according to your enthusiasm.”

A screenshot that appears to show GameStop holdings by A screenshot that appears to show GameStop holdings by

A screenshot that appears to show GameStop holdings of “DeepF***king Value” was posted to Reddit on Sunday, June 2, 2024. (Source: Reddit)

Monday’s surge comes after GameStop rose 180% over a two-day period in mid-May following “Roaring Kitty.” posted for the first time on X, formerly Twitter, since 2021.

Last month’s rally was short-lived, as analysts warned that the meme stock this time around was a far cry from the level of retail inflows seen in 2021.

Still, GameStop benefited from the May rally. Last month, the company sold 45 million shares, generating proceeds of about $930 million. The stock jumped 25% on the news.

Typically, investors expect the stock price of a company issuing new stock — which dilutes the value of current holdings — to decline after a stock sale.

AMC (AMC) also benefited from the meme frenzy, raising $250 million through the sale of 72.5 million shares last month. AMC shares gained 11% to close at $4.81 each on Monday.

Ines Ferre is a senior economics reporter for Yahoo Finance. Follow her on @ines_ferre.

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News Source : finance.yahoo.com
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Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe.Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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