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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.
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.
