Why GameStop stock “roared” on Monday
game stop (NYSE:GME) stock had its best day in years on Monday, surging more than 70% to over $30 per share as of midday ET.
The reason may have been the return of a popular day trader known as “Roaring Kitty” on Twitter. He sparked a short squeeze that pushed the sleepy penny stock to a high of $483 per share in late January 2021.
Roaring Kitty, whose real name is Keith Gill, was a day trader who worked at MassMutual and was one of the key investors who drove GameStop stock to astronomical heights through posts on social media, including Twitter (now known as X). reddit (NYSE:RDDT) via the WallStreetBets channel under the name “DeepF*ckingValue”.
On Sunday night, Roaring Kitty was posted on X and Reddit for the first time in three years, sparking Monday’s massive GameStop rally.
locked in
Roaring Kitty’s first post was a picture of a man in a suit leaning forward and holding a game controller. It’s a popular meme that indicates someone is locked in, engaged, and ready to go. X’s post had 15 million views as of Monday morning.
Gill was the subject of a class action lawsuit (which was dismissed), was the subject of a congressional investigation, and starred in “Dumb Money,” a movie about the GameStop meme craze. His company was also fined $4.75 million by Massachusetts regulators.
Since that first post, trading had to be halted several times on Monday as the trading frenzy repeatedly tripped volatility circuit breakers.
Roaring Kitty posted a few more times on Monday morning, the first of which featured Avengers villain Thanos alongside X-Men’s Wolverine saying, “Okay, I’ll do it myself.”
Another post included the following scene: breaking bad It features the character Walter White saying, “When we say it’s over, it’s over,” to the song ‘Exit Music’ by Radiohead.
Are meme stocks making a comeback?
GameStop wasn’t the only meme stock to surge on Monday. AMC Entertainment (NYSE:AMC) soared alongside GameStop in 2020 and 2021, surging 40% to over $4 per share.
Before today’s meme-induced surge, GameStop was actually posting decent numbers in the fourth quarter. While net sales fell 19% in the fourth fiscal quarter, GameStop’s net income rose 31% to $63.1 million, or 21 cents per share. The retailer’s profits were boosted by a 21% reduction in costs.
For the full year of fiscal 2023, GameStop’s net sales fell 11.7% to $5.3 billion, but net income rose to $6.7 million, or 2 cents per share, up from a net loss of $313 million a year ago.
GameStop’s next earnings report for its first fiscal quarter is scheduled for June 5. Until then, investors should be very wary of former meme stocks being pumped for a short squeeze or anything other than earnings results. If meme stocks make a comeback, prepare for greater volatility like what we’re seeing today.
