GameStop soars more than 80% after Roaring Kitty claims huge stake

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GameStop soars more than 80% after Roaring Kitty claims huge stake

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Shares in GameStop surged more than 80 per cent in pre-market trading on Monday after a post on Reddit purported to show that Keith Gill, also known as Roaring Kitty, had built a position worth $181mn in the struggling video game retailer.

The sharp rise came after Gill’s account, which goes by the name DeepFuckingValue on Reddit, posted a picture late on Sunday that appeared to show he had taken a share stake and options positions in the retailer. GameStop jumped 81 per cent to more than $41.88 a share ahead of the New York open.

The screenshot indicated Gill had bought 5mn shares in the company, bought at $21.27 apiece, and worth $116mn on Friday’s closing prices. It also suggested that Gill owned 120,000 call options with a strike price of $20. The options are worth $65.7mn and are due to expire on June 21.

The day trader was at the centre of 2021’s “meme-stock” mania, when his social media posts encouraged millions of others to pile into the stock and squeeze out hedge funds betting on a share price decline. After a three-year silence Gill reappeared on the X social media site, sending GameStop shares soaring again, though the rally quickly fizzled out.

But Monday’s pre-market move suggested “there’s still huge appetite [among the retail crowd] for this stock, whether healthy or not”, said Kevin Gordon, a senior investment strategist at Charles Schwab.

About 15 per cent of GameStop’s outstanding shares were on loan — a rough proxy for short interest — as of the close of play on Friday, down from just over 25 per cent at the end of May, according to data from S&P Global Market Intelligence. “In Asian and European trading hours so far today there is very slim additional borrowing taking place,” S&P Global said.

After GameStop shares rose in May, the company announced plans to sell up to 45mn new shares, which raised $933.4mn. The company is due to report first-quarter results on June 11. Net sales are expected to have dropped about 25 per cent year on year, according to preliminary results announced in mid-May.

Line chart of Percentage of shares outstanding on loan showing Short interest in GameStop has fallen dramatically since early 2021

On Monday, GameStop was trading at more than 2,300 times its estimated earnings per share for the coming year, Bloomberg data showed. The company would add just under $8bn to its market value if its pre-market gains are realised once trading begins in New York.

Monday’s pre-market rally elicited hundreds of fawning tributes to Gill on social media, with one widely shared post on X describing him as “one of the greatest traders of all time”.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-dominated Nasdaq 100 rose 0.2 per cent and 0.6 per cent ahead of the New York market open.

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