GME pops as trader ‘Roaring Kitty’ sparked meme frenzy posts again

GameStop Shares soared more than 37% in premarket Monday after “Roaring Kitty,” the man who inspired 2021’s epic short squeeze, was posted online for the first time in about 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 DeepF ——Value on Reddit, attracted an army of day traders who encouraged each other and dived into physical video game stocks and call options between 2020 and 2021.

Hedge fund Melvin Capital, which was heavily shorting GameStop, became a target of the army of amateur traders and suffered huge losses that prompted Citadel’s hedge fund arm, as well as Point72, to inject nearly $3 billion into Melvin to shore up his finances. .

The eye-popping mania once forced brokerages including Robinhood to restrict trading in heavily shorted stocks because 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 lawsuit in August 2023.

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

The volatility also led to a series of hearings in Congress on brokerage practices and retail gamification, involving the leaders of Robinhood, Melvin Capital, Reddit, Citadel and Gill. The history-making episode inspired the 2023 film “Dumb Money,” which starred Paul Dano Gill.

In January 2021, shares hit an all-time intraday high of $120.75 per share, adjusted for the split. GameStop announced a 4-for-1 stock split in July 2022. As retail interest waned, the shares plunged along with other meme stocks like AMC. Shares hit a three-year low of $9.95 last month.

The price recently rose again, which may have reignited trader interest. The stock is up 57% so far in May, closing at $17.46 on Friday.

However, GameStop’s most recent earnings report painted a discouraging picture for the video game company. In late March, the company said it had cut an unspecified number of jobs to reduce costs and reported lower fourth-quarter revenue due to increasing competition from e-commerce companies.

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