GameStop is back in the news, this time for soaring more than 30% on Friday morning, as social media stock influencer Roaring Kitty, dropped hints about a potential YouTube livestream. Keith Gill, otherwise known as Roaring Kitty had taken a break from social media these last three years.
The stock stabilised somewhat during the day, trading at around €42.3 by midday Friday.
The livestream is expected to happen at noon Friday Eastern Time and would be the first time Gill went live on his channel since helping drive GameStop’s 2021 meteoric rise. This was mainly through a series of posts and videos highlighting his bullish position on the stock.
GameStop’s shares have been on the rise since mid-May, following Gill coming back to X, formerly known as Twitter. However, the livestream hints have brought fresh energy to the stock. A Reddit account called Deep F***ing Value is also belived to be Gill’s.
Recently, this Reddit account has also been sharing screenshots of an E-trade portfolio, believed to be Gills, which contains 120,000 call options and five million common shares for GameStop, worth about $200 million (€183.49 million) altogether, as of Thursday night.
As such, Gill is expected to continue delving into his bullish position on GameStop during his upcoming livestream, which has already seen interest from around 10,000 people. The YouTube channel Roaring Kitty has 730,000 subscribers.
Why did GameStop shoot to fame?
GameStop is perhaps the best-known example of a meme stock, which are stocks that gain immense popularity through social media, mostly amongst retail investors.
GameStop shares soared back in 2021, following a period of struggle, due to Keith Gill, a licenced securities broker and chartered financial analyst posting online about his recent investment in the company.
He encouraged people to do the same through YouTube and Reddit, on the subreddit r/wallstreetbets, while also sharing his thoughts about undervalued stocks and financial markets in general.
This eventually led to a massive short squeeze situation, when GameStop’s prices increased over a very short period of time. A short squeeze happens when a stock’s price and demand rises due to an increase in the short selling of the stock, and not any actual fundamental reasons.
Short sellers are investors who bet on, and benefit from a stock’s value falling, rather than rising. Hence, in the GameStop situation, due to retail investors being overly influenced by Gill, demand for GameStop shares increased sharply, leading to the stock price rising. This in turn, led to short sellers closing, or covering their positions, by also buying the stock. This eventually leads to the stock’s price rising even more, in a vicious cycle of sorts.
This phenomena led to Gill being suspected of market manipulation and having to appear in front of a congressional committee to defend his position. At the time, he said that he was only acting as an individual investor and trading off public information, while denying having pressurised other traders to do the same.
Morgan Stanley, which owns Gill’s E-trade account is also debating whether to ban his account, due to these allegations, as well as Gill’s recently revealed stock amounts and portfolio on social media.
Steve Sosnick, chief strategist at Interactive Brokers said, as reported by Yahoo Finance, “Is whoever controlling this account doing this in your best interest, or in their best interest? And really, you should think that one through, because, to me, it’s pretty obvious whose interest it’s in.
“If you’re chasing the stock up here, you’re more likely than not the source of liquidity for whoever is controlling this account to sell into your enthusiasm.”
