Keith Gill ‘Roaring Kitty’ made significant trades of GameStop as the stock plummeted towards the end of the trading day.
GameStop $20 calls expiring June 21 were traded 93,266 times with a heavy action occurring after 3:30 p.m.
Although the average trade on the day was 21 contracts, trades in the final period of the day were nearly double in size.
In a recent social media post, Gill claimed to have purchased 120,000 contracts and mentioned that he had not yet closed his position.
Shares surged to over $45 this month, before pulling back. The company took advantage of the rally and sold $2.14 billion worth of shares.
As expiration draws near the question remains whether Gill will choose to exercise the contracts and receive shares or close out the position.
Although it is impossible to determine if he had any involvement in the recent trading activity on Wednesday the possibility of him selling off part or all of his holdings could potentially have a negative impact on the shares.
The stock experienced a significant decline, dropping as much as 19% during the day and ultimately closing 17% lower at $25.46.
The $20 calls reached a peak of $13.90 each earlier on Wednesday, but closed at $6.40. That’s still higher than his claimed average purchase price of $5.6754.
GameStop Raises $2.14 Billion on Back of Roaring Kitty-Led Rally:
- GameStop Corp. raised approximately $2.14 billion from a share sale program. This capitalization followed Keith Gill’s positive remarks about the shares after his return to YouTube
GameStop’s business model has undergone some notable changes recently. Here are the key points:
- Financial Results:
- In the first quarter of 2024, GameStop reported net sales of $0.882 billion, compared to $1.237 billion in the prior year’s first quarter.
- Selling, general, and administrative (SG&A) expenses were $295.1 million (33.5% of net sales), down from $345.7 million (27.9% of net sales) in the previous year1.
- The company’s net loss improved to $32.3 million, compared to a net loss of $50.5 million in the same period last year.
- Cash, cash equivalents, and marketable securities stood at $1.083 billion at the end of the quarter.
- Management Changes:
- GameStop laid off employees, including CFO Mike Recupero, emphasizing an “intense owner’s mentality” introduced by Ryan Cohen, a significant shareholder.
- Cohen’s management style aims to drive turnaround efforts and operational improvements2.
- Investment Policy Shift:
- Adaptations to Market Pressures:
- The company has made strategic shifts in response to evolving consumer preferences and market challenges.
- These changes are crucial for GameStop’s survival and overcoming the perception that it might go out of business4.
While GameStop faces ongoing challenges, these recent adjustments reflect efforts to transform its business model and enhance its financial position.
Shayne Heffernan
