Shares of GameStop are surging again in a puzzling sequel to last month’s frenzy, with the rally immediately following a cryptic tweet about soft-serve ice cream from a key board member.
At Thursday’s opening bell, GameStop stock jumped another 80 percent, to $164, one day after the shares soared more than 100 percent, raising fears that small investors swept up in the mania could again loose big.
The rally began late on Wednesday, soon after GameStop board member and activist investor Ryan Cohen tweeted a mysterious image of McDonald’s soft-serve ice cream accompanied by an emoji icon of a frog.
The renewed mania also followed GameStop evangelist Keith Gill, aka Roaring Kitty, revealing last week that he had doubled his stake in the struggling video game retailer, after he testified in Congress: ‘I like the stock.’
GameStop board member Ryan Cohen’s cryptic ice cream tweet of Wednesday was obsessively analyzed on Reddit for clues to the company’s future
At Thursday’s opening bell, GameStop stock jumped another 80 percent, to $164
On Reddit and Twitter, small traders scrutinized Cohen’s ice cream tweet in a frenzy of speculation, searching for clues it could contain about GameStop’s future.
Cohen, the billionaire founder of online pet-supply retailer Chewy, last year disclosed that he’d taken a 13 percent stake in GameStop, and joined the board touting plans to reinvent the company as an online platform.
Ryan Cohen owns 13% of GameStop, and is an activist investor with a board seat
Users of the Reddit board WallStreetBets, who have pushed to buy up GameStop shares, view Cohen as the company’s savior, obsessively analyzed his tweet for signs of inside information following the ouster of CFO Jim Bell on Tuesday.
One enterprising researcher discovered the following quote on the website of Volition Capital, a major Chewy investor: ‘Chewy’s first official board meeting included two slides, a lot of laughter and a trip to McDonalds for soft serve.’
When Twitter user @vestro shared the theory, his tweet was ‘liked’ by Volition Capital’s managing director, pouring fuel on the bonfire of speculation.
‘Holy f**k!’ wrote one Reddit user. ‘Ryan Cohen has the reigns [sic] as CEO and they just had their first board meeting… Same as he did at Chewy!’
Other users speculated that the frog symbol represented the classic arcade game Frogger, or is a ‘long-used symbol of transition and change, from tadpole to frog.’
Web sleuths discovered info on a Chewy investor’s site that at the company’s first board meeting, Cohen had taken the board out for McDonald’s soft-serve
GameStop shares remain well below their peak last month of $483 at the height of the frenzy
Reddit discussion threads were buzzing again about GameStop on Thursday, with members exhorting others to pile into the stock as the rally gathers steam.
‘Bought lots more #GME today, let’s keep fighting !!,’ wrote one Reddit user Fundssqueezzer, while another user Responsible_Fun6255 said, ‘Rise of the planet of the ape: GME edition’.
It led to concerns that amateur investors would pile into the stock at an inflated price in a gamble that it will rise further. Last month, some small investors lost hundreds of thousands when they poured their savings into GameStop shares, only to see the bubble burst.
‘It’s a pretty risky play to try and buy now … what we might (see) at the open of the cash market is some people trying to get in,’ Oriano Lizza, premium sales trader at CMC Markets in Singapore, told Reuters.
However, some of GameStop’s most ardent promoters are standing behind the stock.
On Friday, one day after testifying before the House Financial Services Committee, Keith ‘Roaring Kitty’ Gill revealed on Reddit that he had doubled the number of shares of GameStop he was holding, from 50,000 to 100,000.
Keith ‘Roaring Kitty’ Gill revealed on Reddit last week that he had doubled the number of shares of GameStop he was holding, after testifying in Congress: ‘I like the stock’
A brokerage account screenshot posted by Gill showed that he sunk $2 million into another 50,000 shares of GameStop, at an average price of about $40 per share
Gill, who had already made about $13 million in profits from his trades, plowed about $2 million of his gains into the trade, paying about $40 per share to increase his stake.
He had testified in Congress: ‘GameStop’s stock price may have gotten a bit ahead of itself last month, but I’m as bullish as I’ve ever been on a potential turnaround. In short, I like the stock.
GameStop shares skyrocketed in January as retail investors, urged on by popular Reddit forum WallStreetBets, bought the stock as a way to punish hedge funds that had bet massively against it.
The squeeze ‘personally humbled’ Melvin Capital’s Gabriel Plotkin, whose firm was bailed out with a $2.75 billion dollar lifeline supplied by hedge fund Citadel’s Kenneth Griffin and Point72 Asset Management’s Steven Cohen.
The risky trading strategies employed by some traders on Reddit have drawn the ire of investing legends such as Charlie Munger, long time business partner of Warren Buffett.
‘It’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors,’ said Munger, Berkshire Hathaway’s vice chairman, at a conference on Wednesday.