GameStop surges up to 50% in the Wall Street premarket after rising more than 73% in the last 30 days. Despite the company announcing job cuts and lower profits in the face of increasing competition, a hope that seemed buried has resurfaced: the awakening of a new meme revolution.
The video game retailer was at the center of record stock market gains fueled by investments from WallStreetbets forum users, the Reddit channel that shook the entire US stock market. In fact, the GameStop earthquake and its subsequent aftershocks in other firms like AMC or BlackBerry led to bankruptcies among some of the country’s biggest short sellers.
This episode seemed like a thing of the past until, without any apparent reason, GameStop has shot up again. The latest boost comes from one of the largest forum users, Roaring Kitty, who tweeted after three years of complete inactivity, facing possible legal consequences for his market movements. Previously, he liked a tweet, foreshadowing his return. The investor behind the account, Keith Gill, was one of the major leaders of the ‘meme revolution,’ investing $53,000 in the company to turn it into 50 million in just weeks.
‘Roaring Kitty’ also has a YouTube channel in addition to his Reddit and X accounts, where he offered strategies. However, after the volatility, all kinds of measures were taken to curb the retail frenzy. Initially, purchases of GameStop on Robinhood, the main platform used by forum users, were limited. Subsequently, Gill had to testify before the US Congress. During his testimony, he defended that “I did not encourage anyone to buy or sell stocks for my own benefit and had no relationship with any hedge funds.”
At that time, there was particular concern about strong retail movements completely shaking up the market and companies. In fact, Melvin Capital suffered such losses due to the GameStop surge that it had to be financially supported by an alliance of other entities with almost $3 billion to avoid bankruptcy.
Now the return to the public scene of one of the main drivers of that rally has unleashed fears of a ‘second round’ three years later, something that has sparked excitement among other stocks, like Black Berry (up 5% in premarket) or AMC (advancing 17%). All of this just by posting a picture on social media showing how they take action with a meme.
The video game company, aside from forum users and other movements, has shown no signs of improvement that could justify the rises. With revenues of $1.79 billion, these have shown a 20% decline. Despite earnings per share improving by 25%, they fell below expectations.
