The GameStop shares surged by 72% after trader Keith Gill, also known as “Roaring Kitty,” made a comeback four years after leading an investment frenzy in the video game retailer. Gill, a former financial analyst at MassMutual, gained a large following by encouraging amateur retail investors to buy GameStop shares through Reddit and YouTube. However, Gill revealed in 2021 that he had lost $13 million in one day from his GameStop investments and faced a lawsuit for allegedly promoting the shares in a deceitful manner. After testifying before Congress regarding meme stock craze, Gill’s social media presence disappeared.
Gill resurfaced on X, Sunday night, marking the end of a three-year hiatus with posts featuring comeback-themed videos. GameStop did not comment on his return. Along with GameStop, retail investors on Reddit also adopted AMC, Bed Bath & Beyond, and Blackberry during the pandemic to keep these struggling companies afloat and challenge hedge funds that bet against their long-term success through short selling. Hedge funds, including Citron Research and Melvin Capital, suffered losses estimated at $5 billion during GameStop’s meme success. GameStop, which had been experiencing declining sales, turned its first profit in two years with the help of meme stock investors in March. In January, the company reported its first annual profit since 2018.
GameStop’s share price increased to $28.25 following Roaring Kitty’s post, although the all-time high was $120.75 in January 2021. Other struggling companies like AMC and Bed Bath also experienced slight share price increases. Predictive analytics director Ihor Dusaniwsky warned that short sellers might face challenges with the resurgence of meme stock buying. In September, GameStop appointed Chewy founder Ryan Cohen as its new CEO and eliminated some jobs to reduce costs in its recent earnings report from March. The company reported a revenue of $1.79 billion compared to $2.23 billion the previous year.
The resurgence of meme stock frenzies like the increase in GameStop’s share price, as well as AMC and Bed Bath, indicate a potential continuation of the trend. Short sellers may experience losses as retail investors continue to drive up share prices of struggling companies like GameStop. The impact of Roaring Kitty’s return and the involvement of retail investors in these stocks highlight the evolving dynamics of the stock market. GameStop’s strategic changes, including appointing a new CEO and cost-cutting measures, illustrate efforts to improve its financial performance amidst industry-wide challenges. The aftermath of the meme stock craze and its lasting effects on the stock market remain a subject of interest and speculation among investors and analysts.
