The stock market influencer behind the so-called meme stock frenzy of 2021 has triggered a fresh surge in shares of GameStop, the struggling US videogame retailer.
Keith Gill, who goes by the name Roaring Kitty online, revealed a $116m (£90.8m) position in GameStop on Sunday.
Gill told his followers he controlled 1.8% of GameStop’s available stock – a holding of five million shares – plus call options that gave him the right to buy more later this month.
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A return to his Reddit account last month, for the first time in three years, was credited then for a renewed rush for GameStop and other out of favour stocks.
GameStop’s own market value doubled in just three weeks.
The retailer’s board cashed in on the renewed interest by raising more than $900m in a subsequent stock sale.
GameStop shares added $4.6bn to its market value after surging as much as 75% in early Monday deals.
They later settled around 30% higher.
LSEG data showed more GameStop shares had changed hands than in those for Apple within the first 42 minutes of official trading.
They stood at £30 per share following Friday’s close at $23.
Gill’s GameStop trades gave birth to the rush of demand for meme stocks in 2021.
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It saw hedge funds’ positions rack up big losses as investors bought up stocks with weak fundamentals, such as GameStop and cinema chain AMC.
They gained a cult-like following through accounts on Reddit and elsewhere.
But the rallies petered out as regulators and politicians called out the activity and the companies’ performances failed to match up to the lofty valuations.
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In the case of GameStop, its core numbers continue to be hurt by struggles associated with the transition to online gaming.
Its main business remains selling new and used videogame discs.
The company warned last month of a drop in first quarter net sales compared with the same period a year ago.
Nigel Green, chief executive of the asset management and advisory firm deVere Group, urged investor caution following the renewed interest but added: “These super quick, super high, headline-grabbing figures are likely going to attract another huge wave of interest and, therefore, capital.
“I would not be surprised if the stock added $100bn by the end of Monday due to the frenzy.”
Content Source: news.sky.com