Investing.com - GameStop Corp (NYSE:GME), the renowned videogame retailer, experienced a nearly 75% surge in share value on Monday, extending a further 21% in after-hours deals. This unexpected rise came after "Roaring Kitty", a social media finance influencer associated with the 2021 meme stock rally, returned to X.com following a three-year absence.
GameStop's shares peaked at an 18-month high of $38.20, marking their steepest one-day percentage increase since January 2021.
This rally also had a positive effect on other meme stocks that have been under pressure over the past year. Shares of theater chain AMC Entertainment Holdings Inc (NYSE:AMC) jumped 78%, while Koss Corporation (NASDAQ:KOSS), a headphone manufacturer, soared 37%. Hertz Global Holdings Inc (NASDAQ:HTZ) rose nearly 12%, and Reddit Inc (NYSE:RDDT) experienced a near 9% increase.
Keith Gill, known on YouTube as "Roaring Kitty" and on Reddit as "DeepF***ingValue", played a crucial role in the Reddit rally of January 2021. This event led to a 21-fold surge in GameStop shares within two weeks, followed by a crash to pre-surge levels in the subsequent days.
The Roaring Kitty account posted a sketch of a man leaning forward in a chair on Sunday, a meme popular among gamers that signifies things getting serious. Despite not mentioning GameStop, the cryptic posts sparked interest, marking the first activity on the Roaring Kitty X (previously known as Twitter) account in years.
GameStop has been struggling recently, cutting an unspecified number of jobs to reduce costs and reporting lower fourth-quarter revenue. Despite these challenges, the company's shares have surged nearly 175% from May until Monday's close, although they remain significantly below their 2021 peak of $120. The stock currently has a market value of approximately $9 billion, a far cry from its peak value of about $37 billion.
Thomas Hayes, chairman at Great Hill Capital LLC, expressed skepticism about a sustained repeat of the meme stock mania, attributing the 2021 rally to a unique combination of circumstances. The meme stock rally was triggered by Gill's Reddit posts about his profitable investments in GameStop, which inspired other Reddit users to band together and squeeze bearish hedge funds.
GameStop's short position currently stands at about a quarter of its publicly available shares, which could result in a paper loss of $1.23 billion for bearish investors, according to analytics firm Ortex. Simultaneously, options activity in the stock has been increasing since the beginning of May, with open interest in call options reaching its highest point this year on May 10.