The echoes of 2021’s meme stock saga reverberated through financial markets this morning, because the obscure ROAR meme coin and video game retailer GameStop experienced a meteoric rise fueled by social media nostalgia. The catalyst? The return of a well-known face – Keith Gill, higher known by his online moniker “Roaring Kitty.”
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Retail investors were sent scrambling after Gill, a superstar amongst the web investment community on Reddit’s WallStreetBets forum, posted a cryptic message hinting at a major stake in GameStop.
The post, featuring a picture of the “Uno Reverse” card, sent speculation into overdrive. Shortly after, Gill confirmed his bullish stance by revealing an enormous holding of 5 million GameStop shares, valued at roughly $116 million based on Friday’s closing price.
ROAR price motion within the last week. Source: Coingecko
Within the 20 minutes that followed Gill’s post, GameStop’s stock price on Robinhood’s overnight markets shot up by 20% to $27.50. This increase followed the stock’s Friday closing price of $23.14. This 12 months, the shares have increased by almost 40%, presumably in consequence of Gill’s sudden comeback.
This disclosure sent shockwaves through the market. GameStop’s stock, infamous for its volatility through the meme stock frenzy of 2021, surged over 100% at its peak in pre-market trading on Monday.
NOW: GameStop soars after the Reddit account that drove the meme-stock mania of 2021 posted what gave the impression to be a $116 million bet https://t.co/0mnyJF4lIf pic.twitter.com/rpRdA2AIWL
— Bloomberg Markets (@markets) June 3, 2024
While the value eventually settled to a formidable 88% increase, the roar from retail investors was undeniable. The ROAR meme coin, seemingly named in homage to Gill’s online persona, mirrored the GameStop price surge of over 300%, reaching a high of $0.001643.
A Meme Stock Revival?
The sudden rise of each ROAR and GameStop has reignited the talk surrounding meme stocks. These assets, often characterised by high volatility and driven more by online hype than traditional financial metrics, captured the imagination of retail investors in 2021. Gill, who played a pivotal role within the initial GameStop saga, appears to be a key player on this potential revival.
Total crypto market cap at $2.4 trillion on the day by day chart: TradingView.com
Nonetheless, analysts remain cautious. GameStop itself is in a precarious position, having recently sold an enormous chunk of shares to bolster its funds while facing continued net losses and projected sales declines. The corporate’s long-term prospects remain uncertain, raising questions on whether this can be a real resurgence or just a nostalgic echo of 2021.
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Weighing Hype Against Reality
The recent surge in ROAR and GameStop presents a classic risk-reward scenario for investors. Early participants who bought in at lower prices stand to reap significant profits. Nonetheless, the inherent volatility of meme stocks poses a major danger of considerable losses.
Featured image from HubPages, chart from TradingView