GameStop Shares Jump 75%, Thanks To Roaring Kitty's Comeback. Here's What Went Down
The resurgence of the Roaring Kitty account on X, was marked by cryptic posts, including a sketch and clips from various movies.
GameStop shares have experienced a staggering surge of nearly 75 per cent on Monday, propelling the stock to an 18-month high of $38.20. This sudden spike came after a three-year absence from the X (formerly Twitter) by the account associated with the social media finance influencer famously known as Roaring Kitty, who was credited with igniting the meme stock rally of 2021.
GameStop's remarkable rally also had a ripple effect on other meme stocks that have faced turbulence over the past year. AMC, the theatre chain, saw its shares jump by 78 per cent, while Koss Corp, the headphones maker, soared by 37 per cent. Hertz Global and Reddit Inc also experienced notable gains of nearly 12 per cent and 9 per cent, respectively.
Who Is Roaring Kitty?
Keith Gill, widely recognised as Roaring Kitty on YouTube and "DeepF***ingValue" on Reddit, emerged as a central figure in the Reddit rally of 2021. This movement witnessed GameStop's shares skyrocketing by as much as 21-fold over a fortnight in January 2021 before plummeting to pre-surge levels shortly afterwards.
The resurgence of the Roaring Kitty account on X, was marked by cryptic posts, including a sketch and clips from various movies. Notably, none of these posts directly referenced GameStop. This revival of activity on social media platforms associated with Gill comes after a prolonged period of silence since mid-2021.
— Roaring Kitty (@TheRoaringKitty) May 13, 2024
— Roaring Kitty (@TheRoaringKitty) May 13, 2024
According to data from J.P. Morgan, GameStop and AMC emerged as the most traded stocks among retail investors by 11 am ET, underscoring the renewed interest in these meme stocks. However, market analysts caution against characterising the participants in this phenomenon as traditional investors, highlighting the absence of any fundamental change in the companies driving this trend.
Challenges Remain For Gamestop
Despite GameStop's recent rally, the company continues to grapple with challenges. In March, it announced job cuts aimed at cost reduction and reported lower fourth-quarter revenue, leading to a 14 per cent decline in its stock price. The number of GameStop stores has also decreased, reflecting ongoing shifts within the company.
While GameStop's shares have surged by nearly 175 per cent in May, they still remain significantly below their peak of $120 in 2021. Market observers, such as Thomas Hayes, chairman at Great Hill Capital LLC, express skepticism about the sustainability of a repeat meme stock mania, emphasising that the unique circumstances of 2021, including the pandemic-induced lockdowns and surplus of disposable income, are unlikely to be replicated.
Meme Stock Frenzy
The meme stock frenzy of 2021, catalysed by Gill's posts on Reddit's Wallstreetbets, led to a broader movement targeting heavily shorted stocks, including AMC. This collective action by retail investors resulted in substantial losses for bearish hedge funds and drew scrutiny from regulatory bodies.
The entire saga, which captured the imagination of many, has even inspired a cinematic adaptation. Craig Gillespie's 2023 movie "Dumb Money" serves as a testament to the unprecedented events that unfolded during the meme stock rally.
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