GameStop shares traded lower on Friday, down nearly 5% in afternoon trading, after surging 14.4% on Thursday as Keith Gill, the meme stock pioneer who helped spark of the first GameStop craze, updated his Reddit account.
Gill likely exercised some of his call options in GameStop and sold some to raise money to increase his stake, analysts said Friday.
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In the update shared to his Reddit account on Thursday, the trader, widely known by his online accounts ‘Roaring Kitty’ and ‘DeepF – kingValue’, revealed that he had sold some of his 120,000 call options that were set to expire on June 21 , while he had purchased another 4,001,000 GameStops. Corp. shares of GME – increasing his position from 5,000,000 earlier this week to 9,001,000 shares in the company.
Gill’s position was worth more than $262 million as of late Thursday, according to a screenshot of his E-Trade brokerage account shared on Reddit.
The 9,001,000-share figure may have been of particular significance to many of GameStop’s devoted retail investor followers, as it equaled the number of shares that company chairman and CEO Ryan Cohen owned at the end of 2020, shortly before the meme stock trading became extremely popular. out. Cohen’s stake has since increased to more than 36 million shares following a 4-for-1 stock split in July 2022, company filings show. He also purchased additional shares on the open market.
Gill may have spent a significant portion of his cash reserves on increasing his stake in the video game retailer, as his cash on hand had shrunk from nearly $30 million to $6.3 million, according to an update he shared on Reddit on Monday.
According to the latest numbers from FactSet, Gill’s recently expanded position makes him the fourth-largest shareholder in GameStop, with a 2.1% stake based on the company’s most recent share count per company filing. GameStop sold another 75 million shares for just over $2 billion earlier this week.
However, these FactSet figures are based on fund managers’ latest 13-F filings, which are only accurate as of the end of the first quarter — before Gill kicked off the latest bout of meme-stock madness last month by doing a three-three breaking through. years of silence on his social media accounts.
Trading volume in GameStop $20 strike calls expiring on June 21 spiked Wednesday afternoon and remained high Thursday, fueling speculation that Gill may dump some of his contracts.
To see: GameStop shares fall as trading in options contracts associated with Roaring Kitty rises
It’s likely that Gill exercised some of his call options and then sold the rest to raise the money needed to buy the additional 4,001,000 shares, said Steve Sosnick, chief strategist at Interactive Brokers.
Gill’s E-Trade account balance showed that his cost basis increased to more than $23 per share, indicating that his total cost per share was more than $25, which included both the price of the stock and the option contract premium paid .
“Looks like he sold a lot of them [the calls]Then it was probably enough so he could turn around and exercise the rest,” Sosnick said during a phone interview with MarketWatch.
