GameStop (GME) raised nearly $2.14 billion by capitalizing on the recent stock rallies fueled by the online re-emergence of influential retailer Keith Gill.
The video game retailer said Tuesday it has completed the sale of 75 million shares, an offering announced last Friday, hours before Gill, known by his online aliases “Roaring Kitty” and “Deep F***ing Value,” went live on YouTube for the first time in three years.
On Wednesday, the heavily shorted stock rose 8%.
The stock has been on a rollercoaster ride over the past month as Gill, known for his bullish videos and posts that fueled the meme frenzy of 2021, resurfaced on social media platforms.
Retail traders’ enthusiasm for GameStop this time has not matched that of three years ago, according to inflows data from Vanda Research.
GameStop shares attracted $18 million in buying last Monday, as the stock soared following a post from Gill showing a huge position in the stock. By comparison, the stock’s peak inflows were $87.5 million on January 27, 2021.
“I still think it will be difficult to attract as large an audience as in 2021. These flows are likely to come from a small group of loyalists,” Marco Iachini, senior vice president of Vanda Research, told Yahoo on Monday Finance.
On Wednesday, Citron Research, led by founder Andrew Left, announced that it no longer has a short position in GameStop after it emerged that the veteran short seller had a position in the stock last week.
“It’s not because we believe there will ever be a turnaround for corporate fundamentals, but with $4 billion in the bank they have plenty of runway to satisfy their cult-like shareholders,” Citron’s post on X reads.
Three years ago, Citron was forced to sell its short position in GameStop at a loss when an army of retail traders bought the stock.
Lemon is no longer short $GME. It’s not because we believe there will ever be a turnaround for corporate fundamentals, but with $4 billion in the bank they have plenty of runway to satisfy their cult-like shareholders. Although Wedbush has set a target of $11 today, we respect the…
— Citron Research (@CitronResearch) June 12, 2024
Shorting involves borrowing shares for a fee to sell them on the market and buy them back at a profit when the price falls.
The short interest on GameStop is currently almost 22% of the float.
“We believe that high-frequency institutional traders are leading the retail effort, and performance data shows that this is indeed not turning into a widespread bullish phenomenon for the meme stock cohort,” Iachini wrote.
The resurgence of the meme frenzy started last month, when GameStop soared 180% in the span of two days after Roaring Kitty posted for the first time on X, formerly known as Twitter, since 2021.
Meme peer AMC (AMC) has also been volatile, and that company also raised capital by selling shares last month.
Shares of the cinema operator were flat on Wednesday.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X @ines_ferre.
