June 7 2024: Meme stock traders are eagerly anticipating Keith Gill’s first YouTube livestream in three years on Friday. Gill, an online influencer famously known as “Roaring Kitty,” played a pivotal role in the dramatic surge of GameStop (NYSE
) shares in 2021.
Gill’s YouTube channel, “Roaring Kitty,” has scheduled a livestream at 12 pm ET, causing GameStop shares to surge over 47% in the previous session. However, the stock fell 9.4% to $42.32 before the market opened on Friday after GameStop reported its quarterly earnings earlier than expected and announced a plan to raise over $3 billion by issuing up to 75 million shares.
GameStop’s first-quarter net sales decreased as more customers turned to e-commerce platforms for purchasing video games and collectibles.
Russ Mould, investment director at AJ Bell, commented, “No matter how much noise someone makes on any platform, at some point the company must generate profits and cash flow to maintain that valuation. The key question is whether anything has fundamentally changed in the company’s competitive position recently.”
In 2021, Gill’s support for GameStop led to a 1,600% increase in its shares before they eventually dropped. He gained a cult-like following among some investors and notoriety among others. His apparent return has caused GameStop shares to soar in recent weeks, rising nearly 150% since May 13 when a Twitter account linked to Gill started posting memes, signaling his bullish stance on the company.
GameStop shares jumped 21% on June 3 after Gill’s Reddit account shared a screenshot of a $116 million bet on the stock. The post, the first in three years, showed a position of 120,000 GameStop June 21 call options at a strike price of $20, valued at $65.7 million at last Friday’s close.
Other meme stocks also declined on Friday, with AMC Entertainment (NYSE
) slipping 2.1% and headphone maker Koss dropping 12.3% after significant gains in the previous session.
NOT LIKE 2021
While the 2021 rally was driven partly by retail investors banding together to challenge hedge funds with bearish positions in GameStop and other companies, analysts note that the same level of enthusiasm seems to be absent this time.
“Despite Keith Gill’s renewed appearance and the subsequent GME price spike, retail traders do not seem to be staying in the trade for long,” analysts at Vanda (NASDAQ
) Track noted earlier this week.
Vanda also mentioned that “high-frequency institutional traders are front-running retail efforts, and performance data indicates this is not turning into a widespread bullish phenomenon for the meme stock group.”
According to data from Ortex, short interest in GameStop is at 19.87% of the free float.
Broader market conditions do not exhibit the same speculative fervor as in 2021, said Jason Draho, head of Asset Allocation Americas at UBS Global Wealth Management. The IPO market remains inactive, and M&A activity is subdued. “Meme stock activity isn’t nearly what it was in 2021, even though we are seeing dramatic one-day moves,” he added.
