- June 3, 2024
- Posted by: legaleseblogger
- Category: Related News
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GameStop Stock Surges as “DeepF***ingValue” Builds $175 Million Position
GameStop (GME) stock surged on Monday after user “DeepF***ingValue, an account believed to be tied to individual investor Keith Gill — who ignited the meme stock rally back in 2021 — posted a screenshot on Reddit late Sunday that purported to show they paid nearly $175 million building a position in the video game retailer.
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Gill is also known as Roaring Kitty on X and YouTube. The user posted the screenshot Sunday night on Reddit’s Superstonk subreddit.
GameStop gained as much as 75% at the market open after doubling at one point during premarket trading; near 3 p.m. ET, the stock was up closer to 30%.
The screenshot showed holdings of 5 million GameStop shares purchased at an average price of $21.274, a position worth $115.7 million as of Friday’s closing price of $23.14. GameStop shares traded hands at $38 each in early trading Monday before they were temporarily halted for volatility.
The account also appears to own 120,000 options contracts that expire on June 21. These contracts confer the right to buy GameStop shares at $20 each, a position worth $65.7 million as of Friday’s close.
Steve Sosnick, Interactive Brokers chief strategist, warned investors against chasing the rally.
“Is whoever controlling this account doing this in your best interest or in their best interest? And, really, you should think that one through because, to me, it [is] pretty obvious whose interest it’s in,” Sosnick told Yahoo Finance on Monday.
“If you’re chasing the stock up here, you’re more likely than not the source of liquidity for whoever is controlling this account to sell into your enthusiasm.”
Monday’s surge comes after GameStop rallied 180% over a span of two days back in mid-May after “Roaring Kitty” posted for the first time on X, formerly known as Twitter, since 2021.
Last month’s rally was short-lived, as analysts warned the meme action this time around was a far cry from the level of retail inflows seen in 2021.
Still, GameStop capitalized on May’s rally. Last month, the company sold 45 million shares, bringing in around $930 million in proceeds. The stock surged 25% on the news.
Typically, investors would expect the stock price of a company issuing new shares — which dilute the value of current holdings — to decline after a stock sale.
AMC (AMC) also capitalized on the meme frenzy, raising $250 million through the sale of 72.5 million shares last month. AMC shares were up about 13% on Monday.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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