GameStop (GME) stock surged by 21% on Monday after a Reddit user known as “DeepF***ingValue,” believed to be individual investor Keith Gill, posted a screenshot late Sunday showing a significant investment in the company. Gill, who was instrumental in the 2021 meme stock rally, revealed an investment of nearly $175 million in the video game retailer.
GameStop’s stock soared as much as 75% at the market’s opening before settling at $28 per share by the close of trading on Monday.
Gill, also known as Roaring Kitty on X (formerly Twitter) and YouTube, shared the screenshot on Reddit’s Superstonk subreddit. The screenshot displayed holdings of 5 million GameStop shares purchased at an average price of $21.274, totaling $115.7 million based on Friday’s closing price of $23.14. GameStop shares hit $38 in early trading Monday before a temporary halt due to volatility.
The account also holds 120,000 options contracts expiring on June 21, which allow for purchasing GameStop shares at $20 each. These options were valued at $65.7 million as of Friday’s close.
Steve Sosnick, chief strategist at Interactive Brokers, cautioned investors against joining the rally without careful consideration.
“Is whoever controlling this account doing this in your best interest or in their best interest? And, really, you should think that one through because, to me, it [is] pretty obvious whose interest it’s in,” Sosnick told Yahoo Finance on Monday. “If you’re chasing the stock up here, you’re more likely than not the source of liquidity for whoever is controlling this account to sell into your enthusiasm.”
A screenshot purportedly showing GameStop holdings by “DeepF***ingValue” was posted on Reddit late Sunday, June 2, 2024. (Source: Reddit)
Monday’s surge follows GameStop’s 180% rally over two days in mid-May, spurred by Roaring Kitty’s first post on X since 2021. However, analysts noted that the recent meme activity doesn’t match the level of retail investor participation seen in 2021.
Despite this, GameStop took advantage of May’s rally by selling 45 million shares, raising approximately $930 million. The stock surged 25% on this news.
Typically, issuing new shares would lead to a stock price decline due to dilution, but this was not the case for GameStop. Similarly, AMC (AMC) raised $250 million by selling 72.5 million shares last month, with AMC shares rising 11% to close at $4.81 on Monday.
