Meme stocks resurface with the return of a renowned trader, shocking short sellers with their unexpected comeback.

An individual displayed on a smartphone greets the camera.

Keith Gill, also known as Roaring Kitty, has made a comeback. Source: SOPA Images / Getty Images

Recall the phenomenon of meme stocks?

In the early months of 2021, the value of video game vendor GameStop experienced a significant surge following the collective actions of a Reddit community of investors, spearheaded by a trader called Roaring Kitty (or DeepFuckingValue on Reddit), who began bulk purchasing. Consequently, this led to the downfall of the hedge fund Melvin Capital, which was betting against GameStop stock (a simplified explanation of shorting is predicting a decrease in stock value). This event marked the initiation of a pattern where smaller investor communities had the capacity to significantly influence stock market movements for certain companies, often opposing the bets made by bigger entities like hedge funds. It was the genesis of the meme stock era.

Although the trend was relatively brief, mostly dwindling by late 2021, it seems to have resurfaced. Recently, Roaring Kitty’s profile on X has become active after a long hiatus of close to three years, beginning to share various memes and cryptocurrency video snippets. While it remains a challenge to interpret the exact intentions behind these posts, the general consensus is that Roaring Kitty is back in the game, and this activity has not gone unnoticed by stock traders.

Having hovered around the $10 to $18 range for the majority of 2024 thus far, the share price of GameStop (trading under the ticker symbol $GME) skyrocketed to $80 over the last couple of days, before stabilizing at the current (premarket) price of $51.31. The value of another meme stock, AMC Entertainment, more than doubled at one point following Roaring Kitty’s resurgence.

For those who were shorting $GME and $AMC, the news was unfavorable. According to Ihor Dusaniwsky from Predictive Analytics, short sellers have incurred losses exceeding $2 billion this week.

How can the mere tweets of one individual cause such drastic fluctuations in stock prices? Keith Gill, also known as Roaring Kitty, garnered fame by maintaining a long position (essentially, betting on price increases) in GameStop for an extended period, transforming a modest $53,000 investment into millions of dollars and amassing a dedicated following along the way.

Nevertheless, the burning question on every investor’s mind is whether the resurgence of meme stock surges is sustainable or if it’s merely a transient phenomenon triggered by Roaring Kitty’s revival (some have pointed out his absence from other social platforms like YouTube, hinting that another individual may be managing his Twitter account).

Presently, a conclusive answer remains elusive. Roaring Kitty’s Twitter account continues to post enigmatic messages, with certain Reddit traders making moves based on stock price actions. The ranking of Robinhood on Apple’s App Store has experienced a notable increase in the last few days, indicating a resurgence of retail investors (in early 2021, Robinhood surged to the peak of Apple’s app store as numerous investors jumped in to trade meme stocks). The trend could taper off or reignite chaos within the investment realm. One thing is clear: This time around, seasoned professionals are sitting up and taking notice.

Valentina Rogers

Valentina is a tech-savvy wordsmith, blending her expertise in digital trends with a talent for crafting compelling stories that resonate with readers of all backgrounds.

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