Shares of GameStop rose on Thursday after a cryptic tweet from meme stock influencer Keith Gill, who rose to prominence after his online personas and high stakes in the video game retailer sparked a trading frenzy among investors. moms and variety show.
Gill posted a photo resembling a Time magazine cover from 2006 of a computer screen on the social media platform X. After his post, GameStop’s stock soared and traded as high as $30.87. The stock closed up 6% at $28.63.
Known as “Roaring Kitty” on YouTube and “DeepF***ingValue” on Reddit’s popular WallStreetBets, Gill was a key figure in the so-called “Reddit Rally” in which GameStop stock rose 1,600% in a moment in January 2021. crushing hedge funds that had bet against the gaming retailer.
Steve Sosnick, chief strategist at Interactive Brokers, noted that this is characteristic of a pattern that has evolved in GameStop’s trading: The stock price will rise, then when it calms down a bit or retreats, Gill’s “Roaring Kitty” personality it tends to appear with a post on social networks.
“We’ve seen that pattern again recently; the stock was at $21 back in November, but then rose to $30 around Thanksgiving, only to give back most of those gains over the past two days.
On Thursday, about 300,000 GameStop options contracts had changed hands by 2:14 p.m., about 1.5 times the usual pace, according to data from options analytics firm Trade Alert.
The stock’s 30-day implied volatility – how much traders expect the stock to move in the near term – jumped to a 3-week high of 132%, from 93% in the previous session, the data showed.
Betting contracts on shares ending above $30 by Friday were the most actively traded options, with about 32,000 of them traded by late afternoon.
‘animal spirits’
Gill re-emerged on social media earlier in 2024 after a three-year hiatus that led to a flood of emotional messages from his followers, many of whom have compared the social media phenomenon to a David taking on the Goliaths of Wall Street and won.
“The resurgence in popularity of meme stocks tends to follow any general revival in market enthusiasm and animal spirits,” said Art Hogan, market strategist at B. Riley Wealth Management. “Whenever markets are at or near all-time highs, that particular part of the speculative side of stocks tends to resurface.”
The rise in meme stock in 2021 was triggered by Gill’s posts on the WallStreetBets subreddit about the profits he had made on his investments in the heavily shorted firm.
The rally spread to other heavily shorted stocks, including AMC Entertainment, as Reddit users banded together to squeeze the bearish hedge funds, costing them billions in losses and drawing attention from US regulators.
The entire episode inspired Craig Gillespie’s 2023 film Dumb Money.
Other so-called meme stocks also traded higher on Thursday after Gill’s post. Shares of Unity Software closed up 5%, while movie theater chain AMC, another darling of retail investors from 2021, rose 6%.
“I wouldn’t be surprised if the believers are not distracted by other things. Crypto has been stealing GameStop’s thunder lately,” Sosnick said.
Shares of the video game retailer are up about 76% so far this year. Meanwhile, bitcoin has surged more than 130% to surpass the $100,000 mark earlier on Thursday, fueled by optimism that regulatory headwinds will ease, in what is a stunning rally for the world’s biggest cryptocurrency.
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