GameStop Corp. (NYSE: GME) made headlines once again on December 5, 2024, as its stock jumped 5.62%, closing at $28.55. This latest surge was fueled by the unexpected return of Keith Gill, better known as “Roaring Kitty,” a central figure in the 2021 meme stock saga. Gill’s cryptic social media activity has reignited retail investor interest, but what does this mean for GameStop and the broader market?
A Cryptic Post Sparks a Rally
Gill, who had been silent on social media for nearly three years, posted an image on Twitter featuring a Time magazine cover with a computer screen. The seemingly innocuous post had an outsized effect, driving GameStop’s stock price higher as retail investors scrambled to interpret its meaning. According to Reuters, trading activity soared, with approximately 300,000 GameStop options contracts exchanged—50% above the usual volume. (Source)
The stock’s 30-day implied volatility also rose to 132%, reflecting heightened expectations of significant price swings. Among the most actively traded options were those speculating that GameStop would close above $30 by the end of the week.
The Legacy of Roaring Kitty
Gill’s influence on GameStop is undeniable. As “Roaring Kitty” on YouTube and Twitter and “DeepF***ingValue” on Reddit, his analyses of GameStop stock during the 2021 short squeeze sparked a retail investor movement. This event inflicted billions in losses on hedge funds, caught shorting the stock, and inspired the 2023 film Dumb Money, cementing Gill’s place in financial history. (Source)
Despite his influence, past rallies triggered by Gill’s activity have often been short-lived. For instance, in May 2024, GameStop shares surged over 100% during a live stream by Gill but later fell from $60 to $20 as excitement faded. Investors should approach this latest rally with caution. (Source)
GameStop’s Current Position
Beyond Gill’s influence, GameStop’s fundamentals remain a point of contention among investors. The company has struggled to transition its business model from traditional brick-and-mortar retail to a more sustainable e-commerce strategy. GameStop is scheduled to release its third-quarter earnings report on December 10, 2024, with analysts projecting a loss of $0.03 per share compared to breaking even in the same quarter last year. (Source)
Despite these challenges, GameStop has exceeded analyst earnings expectations in three of the past five quarters, suggesting a potential for upside surprises. However, the upcoming earnings report will be critical in determining whether the recent rally is supported by improving fundamentals or is merely a temporary spike driven by retail enthusiasm.
What This Means for Investors
GameStop’s resurgence underscores the continued power of retail investors to move markets, particularly when inspired by high-profile figures like Keith Gill. However, the stock’s history of volatility makes it a risky play for investors seeking long-term stability.
For those considering an investment in GameStop, here are key factors to watch:
- Upcoming Earnings Report: Scheduled for December 10, this will provide insights into GameStop’s financial health and progress in its business transformation.
- Volatility Risks: The spike in implied volatility indicates that options markets are bracing for significant price movements, which could result in large gains—or losses.
- Retail Momentum: While retail enthusiasm can drive short-term rallies, history shows that such surges often lack staying power without strong fundamentals.
Conclusion
GameStop’s latest rally, sparked by the return of “Roaring Kitty,” highlights the enduring impact of retail investor movements on the stock market. However, as the company prepares to release its earnings report, it will shift to whether it can back up its market momentum with tangible improvements in its business operations.
For investors, this moment serves as a reminder of the balance between market hype and financial fundamentals. Due diligence and a clear investment strategy are essential when navigating high-volatility stocks like GameStop.
Sources:
- Reuters: “GameStop shares jump as cryptic Roaring Kitty post sparks retail interest”
- Money Morning: “GameStop roars higher: Read this before buying”
- Benzinga: “GameStop rockets as Roaring Kitty returns”
- Wikipedia: “Keith Gill”