Revival of Meme Stocks: GameStop, AMC, and Reddit Shares Soar

Roaring Kitty Roars

The unexpected reemergence on social media of the trader credited with sparking the meme stock craze in 2021 caused GameStop shares to soar on Monday. This surge wasn't driven by the company's financial health but rather by a meme shared by the trader, known as Roaring Kitty, on X.

Surging Shares

GameStop shares surged by 74% on Monday after Keith Gill's account posted a meme on X, marking its first activity in three years. Earlier, the shares had spiked by over 110% and were halted multiple times due to volatility on Monday morning.

Short sellers incurred approximately $1 billion in losses betting against GameStop on Monday, according to data from S3 Partners. Short sellers aim to profit by borrowing shares, selling them, and repurchasing them at a lower price.

Shares of AMC Entertainment, another meme stock, rose by 78%, while Reddit shares increased by around 9%. Shares of the trading platform Robinhood Markets, which had suspended purchases of GameStop, AMC, and other meme stocks during the 2021 frenzy, rose by 4%.

The image posted by Gill portrays a figure leaning forward in a chair with a video game console. GameStop had previously shared a similar cartoon in February, albeit with a blue arrow and chair, whereas Gill's version features red. The meme is interpreted as conveying a sense of seriousness, according to Know Your Meme.

GameStop shares triggered multiple circuit breakers, leading to temporary halts in trading to allow investors to cool down. Robinhood refuted claims on social media on Monday that it had once again halted purchases of GameStop stock on its platform.

Who Exactly Is Roaring Kitty?

Gill, known as "Deepf—-ingvalue" on Reddit, was a prominent figure on the WallStreetBets subreddit, contributing to the unprecedented surge in GameStop's stock by rallying retail investors against short sellers. This movement also propelled other stocks like AMC Entertainment and Bed Bath & Beyond to remarkable heights in 2021, collectively termed as meme stocks due to their volatile nature influenced by social media-driven trader communities rather than traditional market fundamentals.

During a 2021 Congressional hearing on the GameStop frenzy, Gill portrayed himself as a casual daytime trader and emphasised his belief in the stock's potential rather than intentionally fuelling the frenzy. He maintained that his social media presence was primarily educational and denied intentionally misleading investors. Gill disclosed his initial purchase of GameStop stock and call options in 2019, gradually increasing his position over subsequent years, convinced of the company's untapped potential. However, even he was surprised by the stock's unprecedented peak of $483 per share in 2021, considering it a possibility but with low probability at the time of his investments.

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