Chewy Shares Whipsaw After Keith Gill Reveals $245 Million Stake

(Bloomberg) — Chewy Inc. shares erased gains after initially spiking as much as 10% on Monday as Keith Gill — known online as “Roaring Kitty” — disclosed a 6.6% passive stake in the web pet food and product retailer.

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The disclosure with the US Securities and Exchange Commission shows Gill owns roughly 9 million Class A shares, value about $245 million based on Friday’s closing price. Shares of Chewy and Petco Health and Wellness Co. briefly soared last week after Gill posted a cartoon image of a dog on X. Chewy has jumped greater than 70% because the start of May, but stays 77% below its 2021 peak.

“It is a game changer,” said Steve Sosnick, chief strategist at Interactive Brokers. “Having a position sizable enough to justify a filing could be very different than signaling moves via cryptic memes.”

A representative for Chewy didn’t reply to a Bloomberg News request for comment.

Gill, who shot to fame in 2021 as he rallied retail traders around GameStop Corp., returned to social media earlier this 12 months, setting off a volatile period for the firm’s shares in addition to those of other so-called meme stocks. His reemergence sparked a short-term rally in GameStop shares, which the firm quickly capitalized on, raising greater than $3 billion through at-the-market offerings.

The favored stocks influencer, Gill, was sued in a proposed class motion filed Friday in Brooklyn, Latest York, federal court for allegedly orchestrating a “pump and dump” scheme involving GameStop shares.

Chewy, which ships supplies like pet food on to customers, has elevated short interest — a characteristic common across meme stocks including GameStop. Short interest as a percentage of free float has climbed to greater than 17%, data from S3 Partners show.

The video game retailer and Chewy even have one other common thread: Ryan Cohen. Cohen, who co-founded Chewy, is GameStop’s current chief executive officer. Shares of GameStop fell as much as 8% on Monday.

“Chewy is likely to be a greater meme stock trade in comparison with GameStop because the corporate continues to be in its early stages of growth and recently hit an inflection point by way of profitability and free money flow,” said Arun Sundaram, vp and senior equity analyst at CFRA Research. “It might be a ‘safer’ meme stock trade if such a term exists,” he added.

Monday’s filing lists June 24 because the date of event and contained a tongue-in-cheek reference to Gill’s “Roaring Kitty” persona. The document, which appears within the SEC’s Edgar database of corporate filings, includes a piece at the highest for the reporting person to “designate whether you’re a cat” followed by two check boxes.

One reads “I’m a cat.” and the opposite, which is marked, says “I’m not a cat.”

(Updates stock moves, adds proposed class motion in sixth paragraph.)

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