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GameStop has skyrocketed over the past month following several tweets by influencer Keith Gill, better known as Roaring Kitty or DeepFuckingValue. After several weeks of silence, Gill created a new boom. This time he excited investors by sharing his new positions in the game store chain on the social media platform Reddit. ETrade, the broker using the influencer, is now investigating whether price manipulation occurred.

Context: GameStop closed the first trading day of this week 21 percent higher. Pre-exchange price gains were as high as 100 percent.

  • Gill was able to use a picture of his recent purchases to convince investors to invest massively in GameStop.
    • According to the screenshot that Roaring Kitty shared on Reddit, he bought 5 million shares at $21.27.
    • The image also includes 120,000 call options. Each option gives the right to buy 100 GameStop shares by June 21 at $20 each.
  • This is the second time in a few weeks that Gill has talked GameStop's stock price upward. In mid-May, he had also published several tweets insinuating that he would once again set his sights on GameStop. In just a few days, share price had risen nearly 200 percent to $48.75 on May 14, a day after Gill's first tweet in nearly three years. In the days that followed, the stock lost ground again.

Price manipulation investigation

In related news: ETrade, and owner Morgan Stanley, are now investigating whether Gill has engaged in price manipulation. He risks a ban. The Wall Street Journal based on some sources.

  • According to the U.S. news site, the influencer is also in the crosshairs of the stock market watchdog SEC.
  • The Wall Street Journal sources say the broker is concerned about the consequences of a possible ban of Gill. That could provoke a reaction among Gil's fans, resulting in a decline in customers.
    • Remember: ETrade is one of the largest brokerage platforms in the U.S., with 5.2 million retail investors as customers.

Noted: Shortly after the Wall Street Journal reported on ETrade's investigation, Gill posted another screenshot on Reddit showing that he maintained his position in GameStop on Monday, even as the value of his stake rose from $116 million to $140 million in less than a day.

Roaring Kitty before U.S. Congress

Recap: This is not the first time GameStop's trading has attracted regulatory or court attention.

  • After the price explosion of GameStop, and several other meme stocks, at the start of 2021, MassMutual, an insurer and former employer of Gill, had to appear in court. According to the suit, the financial institution did not adequately supervise the trading and online activities of Gill and other agents. A settlement was eventually reached in which MassMutual paid a $4 million fine.
  • In addition, Gill, along with the CEOs of mobile broker RobinHood, among others, had to testify before the U.S. Congress. During the 2021 rally, some leveraged funds ran into trouble. They were forced to sell their short positions, resulting in huge losses. Melvin Capital was the biggest loser at the time. That fund saw more than 50 percent of its value go up in smoke in January.

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