The reappearance of vigilante investor Roaring Kitty has been one of the most entertaining events of the year so far. However, the enormous volatility and questionable trading that has followed is not something to be celebrated. In fact, it is quite concerning.
Keith Gill, also known as Kitty, came out of retirement on May 13, causing GameStop’s stock to surge by 180% to $48.75. Just a few days later, the company announced a stock sale of 45 million shares, raising nearly $1 billion for the treasury. At the same time, they projected losses of between $27 and $37 million for the previous quarter.
This news caused GME stock to plummet by over 30%, and it continued to decline until bottoming out at $18.32. However, a livestream announcement made by Gill on June 6 sent shares soaring 80%, revealing that his GME stockpile was worth over $586 million. During the livestream, Gill expressed his confidence in the leadership of Ryan Cohen and his team.
Coincidentally, Cohen and his team released their quarterly results three days early, showing a first-quarter loss of over $32 million. This news led to another stock sale that brought GameStop over $2 billion in cash. The extreme volatility caused the NYSE to suspend trading 38 times after Gill caused a buying frenzy.
On June 9, Gill posted a photo on his profile with a cat face replacing the mask the Joker wears in a Batman movie. This behavior, while amusing, is also very dangerous. The Massachusetts Secretary of State’s Office announced an investigation into Gill’s GameStop trades, raising concerns of market manipulation, insider trading, or fraud.
While the rise and fall of meme coins may be entertaining, the gamification of stock markets is a worrying trend. The behavior of GameStop and its shareholders is considered madness by analysts. The volatility caused by Kitty’s cult is disruptive to the markets, leading to measures such as the suspension of accounts by the Robinhood investment platform and Morgan Stanley considering axing an account from its MS E-Trade platform.
The rise of crypto-esque YouTube influencers in the stock market is not a positive development, and it poses risks to the stability of the market. While the Securities and Exchange Commission may have come up empty-handed in the past, the activities of Kitty and his followers are being closely scrutinized.
Overall, the actions of Kitty and his followers have caused significant disruption and raised serious concerns about market manipulation and volatility. These events have highlighted the need for greater oversight and regulation in the stock market.