GameStop (NYSE:GME), the meme stock favorite, soared in pre-market trading after “Roaring Kitty” returned to post online for the first time in three years. On X, the social media platform, Roaring Kitty posted a picture of a video gamer leaning forward on his chair, as if to indicate he’s taking a game seriously. This was Roaring Kitty’s first post on X or Reddit since 2021.
Who Is Roaring Kitty?
Roaring Kitty, whose legal name is Keith Gill and who goes by “DeepF——Value” on Reddit, formerly worked in marketing for Massachusetts Mutual Life Insurance. He rallied day traders to invest in GameStop stock and call options from 2020 to 2021, resulting in a surge in the stock.
Melvin Capital, a hedge fund that had heavily shorted GameStop in 2020-2021, became a target for amateur traders and suffered massive losses. Short selling involves borrowing a stock you believe will decrease in price, selling it, and later buying it back at a lower price than it was initially paid for, then returning it to the broker, intending to profit from the price difference.
Melvin’s losses led Citadel’s hedge fund arm and Point72 to inject nearly $3 billion into Melvin to support its finances.
Short Interest in GME Remains High
The strong rally in GME stock from 2020 to 2021 was due to a high short interest. Short interest is a market indicator that reflects the total number of shares sold short and remaining outstanding. As of April 30, the current short interest in GME stands at 64.4 million shares, representing more than 20% of its outstanding shares, which is higher than average.
Is GME a Good Buy Right Now?
Only one analyst has covered GME over the past three months with a Sell rating. Over the past year, GME has declined by more than 15%, and the GME price target of $5.60 implies a downside potential of more than 60% from current levels.
