GameStop’s stock surged again on Monday, June 3, after meme stock master Keith Gill took to Reddit to share a snapshot of what appeared to be a $116 million stake in the company. The video game retailer’s share price went up more than 80% premarket before settling roughly 30% higher on the day.
Gill, also known by Roaring Kitty or DeepF—ingValue on Reddit, visited the r/SuperStonk subreddit to share an image that many speculate is his holdings in GameStop.
The image shows 5 million shares in GME valued at $115.7 million as of Friday and a call option with a $20 strike price set to expire June 21.
A call option is a bet that the chosen stock will go above the “strike” price by the expiration date. In this case, if the price goes well above $20 and Gill exercises the option, Gill can collect massive gains after fees.
The meme-stock movement peaked in early 2021 as retail traders communicating on Reddit invested in companies like GameStop, AMC and RadioShack. GameStop shares exploded more than 1,000% in January 2021, becoming a cultural phenomenon.
Gill’s affinity for the stock manifested in posts on Reddit and his YouTube channel for months before it made headlines.
The GameStop rally with retail traders in the driver’s seat put a short squeeze on some massive hedge funds like Melvin Capital, which had a huge short position on the gaming retailer. The hedge fund lost 49% the first quarter of 2021 and needed a nearly $3 billion injection to help fight off the squeeze.
The situation culminated in retail trading platform Robinhood limiting trading on GameStop. It eventually resulted in congressional hearings and the movie, “Dumb Money.”
Gill disappeared from the public eye for three years before returning with a string of memes in mid-May that sparked a GameStop rally.
Institutional investors are not exactly fans of meme stocks. Given Gill’s considerable social media influence, people continue to debate whether the posts are, or should be, illegal.
Former Securities Exchange Commission (SEC) Chair Jay Clayton weighed in on the situation last time Gill made news in May.
“It’s not insider trading,” Clayton said in an interview with CNBC.
“He’s trading on his own information, that’s why it’s not insider trading. But is this something that we should be tolerating in our markets? Whether it’s legal or illegal, I don’t think so.”
In Gill’s 2021 testimony to Congress, he reiterated his claim that he is a fan of GameStop and said he had never solicited anyone to buy or sell the stock to make a profit.
While there has been some insistence that these antics are tantamount to market manipulation, it doesn’t appear to meet the SEC’s threshold for such a charge.
