Shares of GameStop (GME) soared 21% on Monday after “DeepF***ingValue,” an account reportedly linked to Keith Gill, the retail investor behind the meme stock surge in 2021, posted screenshots to Reddit late Sunday showing it had paid about $175 million to build up a position in the video game retailer.
GameStop shares rose as much as 75% at the market open before paring gains throughout the trading day. Shares closed at $28 a share on Monday.
The user, who is also known as X and Roaring Kitty on YouTube, posted the screenshot to Reddit’s Superstonk subreddit on Sunday night.
The screenshot shows the holding of 5 million GameStop shares, purchased at an average price of $21.274, worth $115.7 million as of Friday’s closing price of $23.14. GameStop shares traded at $38 a share at the open on Monday before being temporarily halted due to volatility.
The account also appears to hold 120,000 options contracts expiring on June 21. Those contracts give the right to buy GameStop stock at $20 a share, making the position worth $65.7 million as of Friday’s closing price.
Steve Sosnick, chief strategist at Interactive Brokers, warned investors not to chase rallying stocks.
“Is the person who is managing this account doing it for your benefit or for their own benefit? Really, think about that. Because for me, [is] “It’s clear whose interests this is in,” Sosnick told Yahoo Finance on Monday.
“If you’ve followed the stock this far, there’s a good chance that whoever manages this account is taking advantage of your enthusiasm and providing you with a source of liquidity to sell.”
A screenshot that appears to show GameStop holdings by “DeepF***king Value” was posted to Reddit late Sunday, June 2, 2024. (Source: Reddit)
Monday’s surge came after GameStop surged 180% in two days following “Roaring Kitty” in mid-May. First Post I have been active on X (formerly Twitter) since 2021.
Last month’s gains were short-lived, and analysts warned that the latest move in memes was a far cry from the levels of retail inflows seen so far in 2021.
Still, GameStop capitalized on the stock price rally in May. Last month, the company sold 45 million shares, raising about $930 million in proceeds. The company’s stock price rose 25% on the news.
Typically, investors would expect the share price of a company issuing new shares to fall after the sale, as it dilutes the value of their current holdings.
AMC (AMC) also jumped on the meme craze, selling 72.5 million shares last month to raise $250 million. AMC shares rose 11% on Monday to close at $4.81 a share.
Inés Ferré is a senior business reporter at Yahoo Finance. Follow her on X. Follow.
The story continues
For the latest stock market news and in-depth analysis, including stock-moving events, click here.
Read the latest financial and business news from Yahoo Finance