Roaring Kitty, Game Stop: Return of an icon sends stocks skyrocketing and ‘meme stock’ fever revives

Roaring Kitty, Game Stop: Return of an icon sends stocks skyrocketing and ‘meme stock’ fever revives
Roaring Kitty, Game Stop: Return of an icon sends stocks skyrocketing and ‘meme stock’ fever revives

Game Stop shares rise again in the premarket by 43.76% after having ended yesterday with a rise of 74.46%.

The recent surge in GameStop stock has once again captured the attention of the financial world, marking a dramatic return to the “meme” stock momentum that dominated headlines in 2021. This Monday, the video game retailer’s stock plummeted. They shot up about 75% on Wall Street, driven by the reappearance on social networks of Keith Gill, better known as “Roaring Kitty.” This influencer and former insurance salesman was one of the main catalysts for the GameStop stock frenzy in 2021, an event that multiplied the value of its shares by twenty-one in just two weeks.

The dynamics behind this rise have their origins in two tweets posted by Gill on Sunday. Upon his return to platform The second tweet, published with the markets already open, featured a montage with images of iconic characters such as Marvel’s Thanos and Wolverine, symbolizing his return to the stock market game.

These tweets not only caused a spike in the stock price, but also caused a significant increase in GameStop’s market capitalization, with over $6 billion added in value. It is important to note that this type of event also causes severe losses for investors who bet on the downside, known as “short sellers.” The sudden increase in stock price forces these investors to close their positions by purchasing shares at the new higher price, often resulting in large losses.

Despite this momentary enthusiasm, some analysts warn that current conditions differ significantly from those of 2021, suggesting that a prolonged rush for meme stocks is unlikely to be sustained. Back then, many individuals were confined at home with money on hand and looking for opportunities in the stock market, a situation that has changed considerably.

This phenomenon highlights the complexities of the modern market, where the influence of social media and coordinated movements of small investors can challenge traditional expectations of market behavior. Additionally, it highlights the importance of understanding short selling, a strategy that involves selling borrowed shares in anticipation of a price drop, which can lead to huge losses if the market moves in the opposite direction.

While the GameStop saga of 2021 demonstrated the power of retail investors in the digital age, the resulting volatility and consequences for various market players raise serious questions about the stability and predictability of the stock market when influenced by viral campaigns and non-traditional mass movements.

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