Roaring Kitty's 50-Minute YouTube Live Triggers 40% Plunge in GameStop
"Roaring Kitty", aka Keith Gill, a renowned retail investor with a huge following on social media, went live on YouTube on Friday.
Just before his stream, shares of $GameStop(GME)$ , his supposed sole stock holding, were already down 32.05% to $31.63. Trading was even halted briefly due to the massive drop. But during his 50-minute live stream, the stock continued to plummet, triggering multiple circuit breakers. By the end of his broadcast, GME had tanked over 40%.
This sell-off persisted until after hours, marking GME's biggest one-day drop since February 4, 2021, when it fell 42%. In fact, it was the fourth-worst trading day in the company's history.
Other volatile retail stocks, like $AMC Entertainment(AMC)$ , also suffered, ending the day down 14% as Keith's stream wrapped up.
This was Keith's first live video in almost four years, he mentioned that GameStop is his only investment, and showed screenshots of his holdings: 5 million shares of GME and 120,000 call options.
He expressed his full confidence in GameStop's billionaire CEO and Chewy founder, Ryan Cohen, saying, "I believe in this guy. It's kind of a gut feeling."
Keith simply reiterated that GME is in the "second phase" of his investment thesis. He added that the company is "right-sizing" and cutting costs to stabilize its traditional business. "The focus now is on transformation, and that's a test of management's capabilities. This is what people should be focusing on," he emphasized.
Surprisingly, GameStop released its first-quarter results four days early, originally scheduled for release after Tuesday's market close.The report wasn't pretty. Net sales fell 29% to $881.8m, missing Wall Street expectations of a range of $900m to $1.09bn. The quarterly loss of $32.3 million narrowed from a loss of $50.5 million in the same period last year.
Plus, the company plans to issue another 75 million shares, potentially raising up to $3 billion, but did not elaborate on the timeline. In May, GameStop already announced a 45 million share issuance, raising over $900 million.
Keith's endorsement helped GME shares skyrocket 1600% in 2021, followed by a steep decline. Since his social media return in early May, GME has surged 60% with wild swings. His live stream hype sent the stock soaring nearly 50% on Thursday. For the second quarter, GME has doubled, up nearly 125%, despite Friday's drop. This week, it's still up over 20%.
Analysts estimate that Keith's GME bets earned him a paper profit of $375 million. If GME closes above $20 on June 21st, he could exercise his call options to buy 12 million shares, boosting his total holding to 17 million shares and potentially making him GameStop's fourth-largest shareholder. But if he sells, it could send GME tumbling again.
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