GameStop (NYSE:GME) stock had its best day in years on Monday, soaring greater than 70% on the day as of noon Eastern time to over $30 per share.
The explanation was likely the return of the famous day trader known on Twitter as “Roaring Kitty,” who sparked the short squeeze that drove the sleepy penny stock to a high of $483 per share in late January 2021 — before it got here crashing back down.
Roaring Kitty, whose real name is Keith Gill, was a day trader who worked at MassMutual and one among the important thing investors who drove GameStop stock to astronomical heights through his posts on social media, including Twitter (now X), and Reddit (NYSE:RDDT) through the WallStreetBets channel under the name “DeepF*ckingValue.”
On Sunday night, Roaring Kitty posted on X and Reddit for the primary time in three years, sparking Monday’s huge GameStop rally.
Locked in
The primary post by Roaring Kitty was a drawing of a person in a suit, leaning forward and holding a gaming controller. It’s a well-liked meme that indicates someone being locked in, engaged and able to go. The post on X had 15 million views as of Monday morning.
Gill had been hit with a class-action lawsuit (which was dismissed), been the topic of Congressional investigations, and been featured in a movie concerning the GameStop meme craze called “Dumb Money.” His company was also hit with a $4.75 million effective by Massachusetts regulators.
After the initial post, trading needed to be halted several times on Monday because the trading frenzy repeatedly tripped the volatility circuit breakers.
Roaring Kitty posted a couple of times more on Monday morning, with the primary one featuring the Avengers villain Thanos saying, “Fantastic, I’ll do it myself,” together with Wolverine from X-Men.
One other post had a scene from Breaking Bad featuring character Walter White saying, “We’re done after I say we’re done,” with the song “Exit Music” by Radiohead.
Meme stock resurgence?
GameStop was not the one meme stock that soared on Monday. AMC Entertainment (NYSE:AMC), which skyrocketed alongside GameStop in 2020 and 2021, surged 40% to over $4 per share.
Prior to today’s meme-fueled surge, GameStop actually posted decent numbers for the fourth quarter. While its net sales fell 19% in its fourth fiscal quarter, GameStop’s net income gained 31% to $63.1 million, or 21 cents per share. The retailer’s earnings were fueled by a 21% drop in expenses.
For the complete fiscal 2023, GameStop’s net sales fell 11.7% to $5.3 billion, but its net income rose to $6.7 million or 2 cents per share, up from a $313 million net loss the previous yr.
GameStop’s next earnings report covering its first fiscal quarter is scheduled for June 5. Until then, investors needs to be very wary of any of the previous meme stocks being pumped by short squeezes or anything apart from earnings results. If we’re seeing a resurgence in meme stocks, be prepared for more wild volatility like what we’re seeing today.