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GameStop and Meme Stocks Rally Again, But for How Long?


Why wait for history to repeat itself if you can force it to yourself?

Former financial analyst Keith Gill, known as Roaring Kitty on YouTube and X and u/DeepFuckingValue on Reddit, helped to usher in the “meme stock” craze in early 2021, sending the value of shares in GameStop and AMC Theatres soaring while squeezing hedge funds that had shorted the beleaguered companies out of billions. On Sunday, he emerged from a social media retirement of almost three years to trigger another bull run on GameStop shares — but unlike the first time, he hasn’t explained why he thinks it’s a good investment, or even mentioned the chain by name.

Instead, Gill shared a wordless meme on X of a gamer leaning forward in his chair, or “locking in,” per the current internet slang. That was all it took for the wildly speculative retail investors of forums like Reddit’s r/wallstreetbets to start buying GameStop ($GME), driving it to $64.83 on Tuesday morning, a price it hadn’t hit since June 2021, when it was coming down from a peak of $81.25. That cryptic first post, followed by a number of galvanizing movie clips Gill shared (including several epic battle and fight scenes, plus Marvel villain Thanos donning his Infinity Gauntlet and saying, “Fine, I’ll do it myself”) had juiced the stock by more than 370 percent.

Once more, GameStop short-sellers felt the crunch, losing an estimated $1 billion in Monday’s buying frenzy. Blackberry and Nokia, another pair of meme stocks, saw modest gains, while AMC opened at $11.82 on Tuesday morning, up from $2.95 at Friday’s close. Trades in GameStop and AMC were halted 15 and 21 times on Tuesday, respectively; GameStop trading had been halted nine times on Monday, while AMC wasn’t halted that day, suggesting that the stocks have gotten more volatile since the beginning of the week.

But these spikes and halts haven’t exactly followed the 2021 script. Crucially, the last time around, Gill was writing Reddit posts and recording YouTube videos in which he made the explicit case that GameStop was undervalued — which is why he initially sank more than $50,000 into a long position on it back in 2019, gradually accumulating more shares from that point forward. This time, he appears to be communicating in pop-culture code, using edited snippets from movies and TV to convey his thinking. This Mr. Robot scene, for example, ends with a shot of the word “Stay” on a computer screen — which can be interpreted by investors as an instruction not to sell their $GME shares.

If Gill is being more cautious in his messaging — to the point of avoiding any direct statements about the market or meme stocks — it might be the result of the scrutiny he faced in 2021, when he had to testify to Congress that he had not solicited anyone to buy or sell GameStop stock for his own profit. His employer through the end of January of that year, the insurer MassMutual, ultimately paid a $4 million regulatory fine because it had failed to oversee trading activity by Gill and other agents. He also faced a lawsuit (later dismissed) accusing him of market manipulation, which became a topic of interest again amid Tuesday’s $GME rally as Jay Clayton, SEC Chair during the Trump administration, vented his frustration with the meme stock phenomenon on CNBC.

“It bothers me,” Clayton said of the trend during a Squawk Box segment in which he also likened it to “gambling” and argued that retail investors were putting themselves at significant risk. “Is this something we should be tolerating in our markets?” he asked. “Whether it is legal or illegal, I don’t think so.” Pressed on how Gill’s tweets could be any more manipulative or harmful than the countless predictions of stock performance published and aired every day, Clayton only said that Gill should be forthright about the reasons for his bullish outlook.

Meanwhile, with or without government intervention — and no regulator is talking about that yet — it’s unclear whether the retail investors can conjure the same magic they did three years ago. Many held onto their GameStop and AMC shares as the share price bottomed out after the 2021 boom and may be looking to sell and seize any profit (or merely cut their losses) during this rebound. A r/wallstreetbets redditor summed up this attitude with a meme labeled “Thank god for the new suckers,” depicting themselves as a “previous bagholder” financially rescued by those now rushing to buy meme stocks. And some skeptics in these communities are predicting a “bubble” that won’t last long.

In addition to withholding his forecast for $GME, Gill has also not disclosed his current stake in GameStop, leaving open the question of what he stands to gain from recent fluctuations, or what his exposure would be if the stock flatlines. That, too, has some observers wary of making any bets based on his tweets. The upturn appears to be entirely vibes-based and fueled by nostalgia for a David vs. Goliath story that, after all, did get made into a movie, Dumb Money, starring Paul Dano as the unassuming Gill. It’s only natural that these investors crave a triumphant sequel.

Of course, sequels have a way of disappointing, and there’s no indication that this one will be different. Meme stock traders can complain about the halts and say that guys like Clayton are allied with the hedge funds, but it won’t change the dangerous game they’re playing with these cycles of delirious hype. Experienced as they are with the short squeeze, they should know that for everyone who reaches the moon, there’s someone else crashing down to earth.

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