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GameStop’s share price leaped 40 per cent before Monday's opening bell on Wall Street – all because an infamous web forum user posted on social media.
The memestock was given a jolt of life after Keith Gill, known as “RoaringKitty” on YouTube and “DeepF***ingValue” on Reddit, broke a three-year silence with a post on X, formerly Twitter.
Mr Gill was a former marketer at an insurance firm who has been credited with kicking off the 2021 GameStop memestock short debacle, according to The Associated Press.
He became a cause célèbre in 2021 after his posts on the subreddit Wallstreetbets ignited a Wall Street battle between thousands of smaller retail investors and large hedge funds that were betting heavily against the survival of GameStop, shorting its stock.
The rally was unprecedented in the modern era and went on to inspire the 2024 film Dumb Money.
On Sunday, Mr Gill posted a sketch on X of a man leaning forward in his chair — recognisable to his audience as a way of saying “things are about to heat up”.
He followed this up by posting an old YouTube video saying: “That’s all for now cuz I’m out of breath. FYI here’s a quick 4min video I put together to summarize the $GME bull case.”
His dramatic return to social media, coupled with his insinuation that something significant was on the horizon, appears to have been eaten up by the memestock traders – sending the share price soaring.
However, despite the excitement, nothing has actually happened at GameStop to warrant the newfound investor optimism, according to Art Hogan, chief market strategist at B Riley Wealth.
He said that it was not the company, but rather Mr Gill who “seems to be the most likely suspect for the renewed interest today,” adding that he wants to be “careful not to characterize the participants in this phenomenon as investors.”
“There's no fundamental change in any of the companies that are popularized in this phenomenon,” he told Reuters.
Popular memestocks — like the market in general — have been doing well this year.
Shares of GameStop Corp., which have faded steadily since 2021, are up 57 per cent this month.
By comparison, AMC Entertainment Holdings Inc., is up 10 per cent over the past 30 days; Koss Co. a headphone manufacturer, is up 37 per cent this month, and BlackBerry, the one time dominant smartphone maker, is up 4 per cent. The retailer Bed, Bath & Beyond, another meme stock, sought bankruptcy protection last year.
That said, the 2021 meme traders are still way, way down on their investments; even with a 57 per cent surge in May, the stock's value is still 80 per cent below its 2021 peak.
Thomas Hayes, the chairman of Great Hill Capital LLC, told Reuters that conditions in the market have changed in ways that are likely to prevent another meme stock craze from taking off — like the end of the pandemic.
“It was a point in time when you had a bunch of people stuck at home with free money and nothing to do and that's no longer the case,” he told the outlet.
