May 18, 2024

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GME jumps in as the ‘Roaring Kitty’ trader driving the posts crazy once again

GME jumps in as the ‘Roaring Kitty’ trader driving the posts crazy once again

A man passes a GameStop location on Sixth Avenue in New York, March 23, 2021.

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GameStop Shares rose more than 37% in the premarket on Monday after “Roaring Kitty,” the man who inspired 2021’s epic short squeeze, went online for the first time in nearly three years.

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Roaring Kitty, whose legal name is Keith Gill, was a former marketer for Massachusetts Mutual Life Insurance. Gill, who goes by the name DeepF——Value on Reddit, attracted an army of day traders who encouraged each other and piled into traditional video game stocks and call options between 2020 and 2021.

Hedge fund Melvin Capital, which had been heavily shorting GameStop, became the target of an army of amateur traders and suffered huge losses that prompted the hedge fund arm Citadel, as well as Point72, to pump nearly $3 billion into Melvin to shore up its finances. .

Once upon a time, the dizzying mania forced brokerage firms, including Robinhood, to limit trading in shorted stocks so dramatically that it blew up their clearinghouse margin. A Robinhood user has filed a class action lawsuit following the app’s decision to restrict GameStop trading on its platform. Robinhood won the dismissal of this suit in August 2023.

There was another class action lawsuit filed against Gill, alleging that he posed as a novice trader despite being a licensed professional.

The volatility also led to a series of congressional hearings into brokerage and retail trading practices, involving the leaders of Robinhood, Melvin Capital, Reddit and Citadel in addition to Gill. This historical episode inspired the 2023 film “Dumb Money,” in which Paul Dano plays Jill.

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GME 5-year chart

In January 2021, shares reached an all-time intraday high of $120.75 per share. As retail interest faded, the stock collapsed, along with other meme stocks like AMC. Last month, shares hit a three-year low of $9.95.

Recently, the stock has begun to move higher again, which may have reignited trader interest. The stock is up 57% so far in May and closed Friday at $17.46.

However, GameStop’s latest earnings report showed a depressing picture at the video game company. In late March, the company said it was cutting an unspecified number of jobs to cut costs and reported lower fourth-quarter revenue amid increased competition from e-commerce companies.

GameStop reported revenue of $1.79 billion for the fourth quarter, compared to $2.23 billion in the same quarter a year earlier.