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GameStop Shares Soar as 'Roaring Kitty' Returns to Social Media, Sparking Renewed Meme Stock Frenzy

Shares of GameStop surged significantly on Monday, fueled by a post from "Roaring Kitty," the figure central to the 2021 short squeeze phenomenon, marking his first online appearance in about three years.

The post featured an image on X (formerly Twitter) depicting a video gamer intently leaning forward, signaling serious gameplay. This was Roaring Kitty's inaugural post on the platform since his hiatus began in 2021, quickly attracting 63,000 likes within 13 hours.

The company's stock price closed 70% higher after reaching an increase of as much as 110% during the day, with several trading halts due to extreme volatility. Other meme stocks also saw notable gains, with AMC Entertainment climbing 22%, and shares in Reddit rising 13%.

Roaring Kitty, legally known as Keith Gill, is a former marketing professional at Massachusetts Mutual Life Insurance and was known as DeepF------Value on Reddit. He became famous for rallying a large group of retail investors who aggressively bought shares and call options in GameStop between 2020 and 2021, significantly impacting the stock's value.

This investor movement primarily targeted short sellers and hedge funds that were bearish on GameStop and similar companies, leading to a squeeze where these entities had to cover their positions, thereby driving up the stock prices. Presently, short positions in GameStop still represent over 24% of its available shares.

Melvin Capital, a hedge fund that was substantially short on GameStop, suffered severe losses during this period. This led to financial support from Ken Griffin’s Citadel and Point72, who injected nearly $3 billion to stabilize Melvin's finances.

The surge in GameStop's stock price in early 2021 from about $3 to over $120 within three months prompted several brokerages, including Robinhood, to limit transactions on heavily shorted stocks.

This action led to a dismissed class-action lawsuit by a Robinhood user in August 2023 and another lawsuit accusing Gill of misrepresenting himself as a novice trader despite his professional credentials.

The saga also sparked congressional hearings examining brokerage practices and the gamification of retail trading, featuring testimonies from executives of Robinhood, Melvin Capital, Reddit, Citadel, and Gill himself. The events were later depicted in the 2023 film “Dumb Money,” with Paul Dano portraying Gill.

GameStop's stock has recently shown signs of revival, increasing 57% in May alone, closing at $17.46 on the previous Friday. However, the company continues to face challenges, as indicated by its latest earnings report, which showed a decline in revenue and unspecified job cuts to decrease expenses.

In late March, GameStop reported a revenue of $1.79 billion for the fiscal fourth quarter, down from $2.23 billion a year earlier.


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