GameStop Shares Rise After Investor Claims Stake

gamestop-shares

GameStop, a popular meme stock, is once again on the rise after a social media post purportedly from “Roaring Kitty,” an investor, indicated that the company owned a sizable portion.

The company’s shares rose more than 70% from Friday’s closing price when they opened for trading on Monday, closing at about $40 per share.

The increase followed the release of a screenshot purportedly owned by Keith Gill, valued at over $100 million (£78 million), from his Reddit account. The screenshot showed Gill holding 5 million GameStop shares, or nearly 2% of the company’s stock.

The post was one of many that the Roaring Kitty accounts have been making in recent weeks after going quiet for a while.

It was impossible to verify the authenticity of the post because neither Mr. Gill nor GameStop answered emails requesting comments.

In 2021, Mr. Gill rose to prominence when he persuaded a horde of internet investors to support GameStop.

Professional Wall Street firms that had placed bets against the retailer faced financial pressure as a result of the unanticipated spike in the struggling company’s shares.

According to a post made in that year, Mr. Gill owned roughly 200,000 shares, or $30.9 million.

Monday saw gains in shares of some other so-called meme stocks, like AMC and Blackberry, whose rise and fall seem unrelated to the business’s fundamentals.

Analysts had contended that the initial spike in meme stocks was caused by the increase in time and savings that many households experienced during the pandemic as a result of government assistance programs and the cancellation of numerous in-person events.

As the markets have rebounded this year, trading companies like Charles Schwab and Robinhood have noted an increase in the number of new accounts and activity from retail investors, or those who do not work for investment houses or other private companies.

GameStop profited from the interest last month, selling shares for $933 million.

However, the actions have caused some unease in the banking sector and in Washington, where hearings regarding the GameStop phenomenon were held in 2021.

Former financial regulator Jay Clayton, who oversaw the Securities and Exchange Commission under former President Donald Trump, likened it to gambling in an interview with business broadcaster CNBC last month.

“It bothers me on many levels,” he said. “It’s a lot closer to gambling than it is to trading and it’s certainly not investing.

“Is this something we should be tolerating in our markets?” he added.

“Whether it’s legal or illegal, I don’t think so.”