Roaring Kitty rides again: GameStop's meme-stock rally shows 'gamification' may be back

By James Rogers

GameStop shares skyrocketed following the return to social media of influential investor and analyst Keith Gill, also known as Roaring Kitty

The meme-stock rally that sent shares of GameStop Corp. skyrocketing Monday has sparked memories of the "gamification" of trading that occurred during the meme-stock frenzy in 2021.

GameStop shares (GME) surged 74.4% on Monday following the return of influential investor and analyst Keith Gill, also known as Roaring Kitty, to social media. Gill made his first post in three years on X, formerly known as Twitter, on Sunday, and followed up that cryptic post with a series of posts on Monday.

"It seems like an example of the 'gamification' of markets," James Clunie, a director at investment consultancy Long-Short Consulting and an honorary professor at the University of Edinburgh, told MarketWatch. "Given Roaring Kitty's ability to coordinate traders, though, it doesn't seem irrational for traders to get involved and 'play.'"

Related: Roaring Kitty is back, and GameStop's stock is rallying. The company is still struggling to make money.

"The one thing I wonder about is how many of today's players lost money last time round on [GameStop] etc.," he added. "Whereas I'd expect those who lost money previously to be reticent this time round, maybe the fun of the game compensates for the losses - akin to the pleasure of gambling, perhaps?"

This gamification of trading was thrust into the spotlight in 2021 after volatility in stocks such as GameStop and AMC Entertainment Holdings Inc. (AMC) prompted online-trading application Robinhood and some of its rivals to temporarily prevent customers from purchasing shares in the companies.

GameStop's fellow meme stock AMC also surged Monday, rising 78.4%.

Related: AMC's stock surges along with fellow meme stock GameStop as Roaring Kitty returns

"Just today, meme stocks added over $6 BILLION in market cap ..." Stocktwits, a social platform for investors and traders, posted on X on Monday afternoon.

Earlier, Stocktwits said that GameStop sentiment on its platform was "off the charts bullish."

GameStop's stock is also on pace for largest percent increase since Feb. 24, 2021, when it rose 103.94%, Dow Jones Market Data show. GameStop shares, which are trading at $29.25, are also set for their highest close since Aug. 29, 2022, when they closed at $31.55. GameStop shares are trading on volume of 167.42 million shares, well above their 65-day average trading volume of 6.89 million shares.

Related: What is Keith Gill's net worth? No updates since 2021

Howard Ehrenberg, a partner at law firm Greenspoon Marder, noted that the movement in GameStop shares is not based on the company's fundamental performance and pointed to the recent movement in other stocks, such as Trump Media & Technology Group Corp. (DJT).

"I believe that this is pure speculation to try to squeeze the shorts that have always existed on Gamestop," he told MarketWatch. "Do not be surprised if the price reverses equally fast."

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-13-24 1920ET

Copyright (c) 2024 Dow Jones & Company, Inc.