Meme stock GameStop, known for a stellar rally in 2021 spurred by social media, shows volatility on news of probes into 'Roaring Kitty'.
Shares in meme stock GameStop closed down 5.5 percent on Monday as investors reacted to news that celebrity investor Keith Gill faced investigations and a class-action lawsuit that was later dismissed.
Gill was targeted by a class-action lawsuit over his recent social media posts around the company before the suit was abruptly dropped by the plaintiff on Monday.
His actions caused other investors to lose money, said the investors, led by Martin Radev, who lives in the Las Vegas area.
Gill on 12 May posted a cryptic message on social media platform X that was interpreted as a bullish signal for GameStop.
He had not posted to social media in the preceding three years.
Shares in GameStop more than tripled over the following two days, but returned largely to their previous levels by 24 May. On 2 June Gill disclosed on social media that he owned 5 million shares in GameStop shares and 120,000 call options, and on 13 June disclosed he had exercised the call options but owned 9 million shares.
On 3 June the Wall Street Journal wrote about the timing of Gill's options trades and said his brokerage platform E*Trade considered banning him from the platform.
The Journal also reported that the Massachusetts Securities Division was examining Gill's actions.
Gill's actions contributed to rises of more than 1,700 percent in GameStop's share price in January 2021, mostly fuelled by small individual investors, which caused steep losses for large hedge funds that were heavily shorting the troubled retailer.
Gill revealed on Monday in a securities filing that he owned a 6.6 percent stake in online pet food and product retailer Chewy.
Shares in the company spiked in early trading before closing down 6.61 percent.
This Cyber News was published on www.silicon.co.uk. Publication date: Tue, 02 Jul 2024 11:43:06 +0000