GameStop (NYSE:GME) stock had its best day in years on Monday, soaring more than 70% on the day as of noon Eastern time to over $30 per share.
The reason 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 came crashing back down.
Roaring Kitty, whose real name is Keith Gill, was a day trader who worked at MassMutual and one of the key 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 first time in three years, sparking Monday’s huge GameStop rally.
Locked in
The first post by Roaring Kitty was a drawing of a man in a suit, leaning forward and holding a gaming controller. It is a popular meme that indicates someone being locked in, engaged and ready 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 subject of Congressional investigations, and been featured in a movie about the GameStop meme craze called “Dumb Money.” His company was also hit with a $4.75 million fine by Massachusetts regulators.
After the initial post, trading had to be halted several times on Monday as the trading frenzy repeatedly tripped the volatility circuit breakers.
Roaring Kitty posted a few times more on Monday morning, with the first one featuring the Avengers villain Thanos saying, “Fine, I’ll do it myself,” along with Wolverine from X-Men.
Another post had a scene from Breaking Bad featuring character Walter White saying, “We’re done when I say we’re done,” with the song “Exit Music” by Radiohead.
Meme stock resurgence?
GameStop was not the only 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 full 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 year.
GameStop’s next earnings report covering its first fiscal quarter is scheduled for June 5. Until then, investors should be very wary of any of the former meme stocks being pumped by short squeezes or anything other than earnings results. If we are seeing a resurgence in meme stocks, be prepared for more wild volatility like what we are seeing today.
