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By some measures, the return of the businessman known by the nickname RoaringKitty to the investment fray was influential.
Since returning to social media after a three-year hiatus, Keith Gill has helped spark a surge in the share price of GameStop, the video game retailer at the center of the 2021 “stock meme” craze.
However, many of his followers hoped that Gill could spark a wider revival of the mania. His earlier social media posts were a key catalyst that helped propel the struggling GameStop into a whirlwind of intraday trading frenzy where normal pricing concepts were thrown out the window. The stock climbed about 2,000 percent in early 2021, with retail investors piling into GameStop and other big names with struggling businesses before it all went bust.
This time, however, the drama was a more limited affair. In the five weeks since his first cryptic post on X, showing an illustration of a man leaning forward in a chair, GameStop’s stock price has more than halved, though at one point it more than doubled. That allowed the company to raise $3 billion in new stock sales, and the company’s newly strengthened balance sheet prompted prominent short seller Andrew Left of Citron Research to drop his bets against GameStop this week. The company is now valued at $12.4 billion.
But all of that was a far cry from the mania of 2021. “I wouldn’t characterize it as anything close to what we saw in 2021. This time it was one name and it was GameStop,” said Joe Mazzola, chief trading and derivatives strategist at of Charles Schwab. Even GameStop made it into the top 10 most active names in May only among millennial broker clients.
“People were buying stocks in May, but they weren’t picking up like we saw in 2021 — options activity in the overall market was down from where it was,” Mazzola added.
There were a few flashes of excitement outside of GameStop. Trading volumes initially rose last month at AMC and BlackBerry — both hot memes in 2021. But the increased activity only lasted a few days. While AMC’s stock has certainly gained — up 75 percent since RoaringKitty’s reappearance — it’s no longer attracting the frenzy it once did. None of the stocks made the May list of the 25 most traded among its millions of Schwab retail clients.
“What we’re seeing here is really just market fraud — there are other pockets of froth,” said Steve Sosnick, chief market strategist at Interactive Brokers. “You just don’t have the same conditions from 2021 – zero rates, a bull market and everyone isolated and online because of the pandemic.”
Higher interest rates also made speculation using borrowed funds more expensive. Bullish investors are still plentiful — the S&P 500 closed at another record high this week — but they have other targets, such as chipmaker Nvidia, which easily beat GameStop this week to become Interactive’s most traded stock.
“RoaringKitty has not proven to be a match for AI mania,” Sosnick said.
Still, each development in the latest episode attracted thousands of comments, jokes and memes on Reddit from oddly named users. “I bought a few and literally forgot about it,” Reddit user StinkyDogFart wrote this week in response to another reawakened GameStop fan. “All the media noise brought me back, now I’m buying more and enjoying it more than ever.”
On Thursday, online interest in the company’s annual general meeting was so strong that the event floundered, forcing a postponement. Later, Gill revealed that his stake in GameStop reached just over 9 million shares, worth $262 million, making him the fourth-largest shareholder with a 2.3 percent stake, according to LSEG data.
“At this rate RK [RoaringKitty] will host shareholder meetings on his YouTube channel,” said one Reddit user known as Penguinpoopparty.
Perhaps a big reason the GameStop craze hasn’t caught on, however, is the ambiguity of Gill’s strategy. In a YouTube live stream earlier this month, Gill sipped beer and laughed as his appearance coincided with a sharp selloff in GameStop stock. He said he supports GameStop’s administration, but gave no details.
In 2021, Gill presented an investment case based on GameStop’s market potential and its reboot efforts, as well as the potential to “crowd out” short sellers, forcing them to buy stock to cover their positions. This time, its mere presence seems to be the main argument for GameStop shareholders. So far this has proven difficult to translate into a wider movement.
jennifer.hughes@ft.com