GameStop shares rocket, pounding short sellers, as 'Roaring Kitty' returns

The man credited with igniting the 2021 meme stock rally has posted his first social media message in nearly three years.

May 13, 2024 - 18:30

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GameStop shares rocket, pounding short sellers, as 'Roaring Kitty' returns

GameStop (GME) shares soared in early Monday trading, taking the stock to the highest levels since last July, after a retail investor who was credited with sparking the 2021 meme-stock frenzy reemerged.

Keith Gill, better known by his online alias Roaring Kitty, on Sunday posted the first message on his verified X social media account in three years, showing an image of man leaning forward in a chair.

The image, which appeared to indicate someone sitting up and paying attention, included no other information and didn't include any reference to a particular stock. It was nonetheless tied to GameStop, which Gill began touting in January 2021.

pic.twitter.com/YgjVqtgcNS— Roaring Kitty (@TheRoaringKitty) May 13, 2024

Shares in the money-losing videogame retailer at that time were trading at around $9 a share. Shortly after they surged as high as $81.25 on a split-adjusted basis.

Gill's ultimate windfall was never made public, but his former employer, a subsidiary of MassMutual, was subject to a lawsuit brought by state regulators in Massachusetts for violation of securities law by failing to supervise its agents.

The group paid a $4.75 million fine without admitting any wrongdoing.

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GameStop shares have been in a persistent and largely uninterrupted decline since Gill stopped posting about the stock and its prospects through his various social media accounts. The stock closed Friday at $17.56 a share with a market value of $5.35 billion.

Many analysts consider that level severely overvalued for a company that's had only two profitable quarters in the past three years.

Its most recent earnings report, published in March, showed holiday-quarter sales fell nearly 20% from 2023 levels to $1.79 billion, while the group unveiled a fresh round of job cuts.

"We have received, and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including blogs, articles, message boards and social and other media," GameStop said in a Securities and Exchange Commission filing on March 26.

"This includes coverage that is not attributable to statements made by our officers or associates. Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our Class A Common Stock which could cause stockholders to lose their investments," the company added.

Financial analytics group Ortex, meanwhile, noted that if Monday's early move holds, investors who have bet against GameStop shares stand to lose more than $437 million.

In fact, short sellers have lost more than $800 million since the stock began to rally at the start of the month, Ortex said.

$GME Short Sellers have lost over $800 million since the beginning of May as the price has more than doubled in just 8 trading days.

See the latest in the app or https://t.co/SJi6yme1xK— ORTEX (@ORTEX) May 13, 2024

Short-sellers bet against a company by borrowing shares and selling them. If the price of the stock declines, the short-sellers will buy back the shares at a lower price, return the borrowed stock (while paying a fee), and pocket the difference.

GameStop shares were last marked 34% higher in premarket trading to indicate an opening bell price of $23.45 each.

That move would extend the stock's one-month gain to around 133% and value the Grapevine, Texas, retailer at around $7.25 billion.