Shares of GameStop (GME) rose Monday after user “DeepF***ingValue” on Reddit, an account believed to be linked to individual investor Keith Gill — who sparked the 2021 meme stock rally — late Sunday posted a screenshot on Reddit claiming to show that they paid nearly $175 million to build a position in the video game retailer.
Gill is also known as Roaring Kitty on X and YouTube. The user posted the screenshot to Reddit’s Superstonk subreddit on Sunday evening.
GameStop gained as much as 75% in the open market, after doubling at one point in premarket trading; at 10 a.m. ET, the stock was up nearly 35%.
The screenshot showed 5 million GameStop shares purchased at an average price of $21.274, a position worth $115.7 million as of Friday’s closing price of $23.14. GameStop shares traded at $38 each in early trading Monday before being temporarily halted due to volatility.
The account also appears to own 120,000 options contracts that expire on June 21. These contracts give the right to buy GameStop shares for $20 each, a position worth $65.7 million at Friday’s close.
Steve Sosnick, chief strategist at Interactive Brokers, warned investors against chasing the rally.
“Is the person who manages this account doing this in your interest or in their interest? And actually you should think about that carefully, because I think it is [is] It’s pretty clear whose interest it’s in,” Sosnick told Yahoo Finance on Monday.
“If you’re chasing the stock here, you’re probably the source of liquidity for whoever runs this account to sell your enthusiasm.”
Monday’s surge comes after GameStop rallied 180% over two days in mid-May following “Roaring Kitty” posted for the first time on X, formerly known as Twitter, since 2021.
Last month’s rally was short-lived, as analysts warned that the meme action this time around was a far cry from the level of 2021 retail inflows.
Still, GameStop benefited from May’s rally. Last month, the company sold 45 million shares, generating about $930 million in proceeds. The stock rose 25% after the news.
Typically, investors expect the stock price of a company that issues new shares – diluting the value of current assets – to fall after a share sale.
AMC (AMC) also benefited from the meme frenzy, raising $250 million last month through the sale of 72.5 million shares. AMC shares rose about 10% on Monday.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X @ines_ferre.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
