A series of actions by Keith Gill, aka Roaring Kitty, helped renew the smoldering meme rally last week and many market participants cried foul over his actions. SPAC sponsor and venture capitalist Chamath Palihapitiya on Sunday weighed in on the development in a substack post.
What Happened: Gill posted on social media for the first time in about three years in mid-May and then stirred excitement by posting a screengrab of his trading account in the r/SuperStonk Reddit forum, which revealed a huge GameStop Corp. GME stake, comprising stocks, and call options.
These actions have created volatility in the shares of the videogame retailer. From $17.46 ahead of Gill’s first post since early 2021, GameStop rose to a high of $64.82 on May 14 before losing most of its gains. The stock rally resumed last week and it rallied to an intraday high of $40 on Monday before ending the session at $28.
Gill’s countdown for a YouTube livestream, scheduled for mid-day on Friday, sent the stock spiking again and it climbed to a high of $48 in early trading on Friday. The stock plunged after the company released its first-quarter earnings report ahead of schedule and also announced a common stock offering.
GameStop ended Friday’s session down $39.38 at $28.22, according to Benzinga Pro data, unimpressed by Gill’s livestreaming. In premarket trading, the stock was up 5.14%.
Palihapitiya said despite Gill’s actions having a significant impact on the stock price, “current SEC rules do not address the outsized role that social media influencers play in driving stock purchases, especially when there is no clear deception involved.”
“Notably, Keith has not explicitly endorsed investing in GameStop or made any claims about its financial prospects,” he added.
See Also: Best Meme Stocks
Why It’s Important: Gill’s latest trading update shows he continued to hold 5 million shares and 120,000 June 21 call options with a strike price of $20. GameStop’s subsequent early earnings release and stock offering puzzled many.
Social media users blamed GameStop chairman and CEO Ryan Cohen for siding with hedge funds as he looked to prevent losses for them stemming from a potential gamma squeeze. A gamma squeeze is caused by large trading volumes in one direction in a short space of time.
Cohen’s RC Ventures owned 36.84 million shares, or roughly 10.5% of GameStop at the end of the first quarter.
GameStop is scheduled to hold its annual shareholders meeting on Thursday, June 13.
Photo by TechCrunch on Flickr
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