At around 12:25 PM ET on Friday, Keith Gill, known online as "Roaring Kitty" on YouTube and Twitter, started a live video stream on YouTube. Before his broadcast began, GameStop (GME) shares had already dropped 32.05% to $31.63, halting trading due to the sharp decline. During his 50-minute livestream, GameStop's stock continued to fall, ending down over 40%.
Analysts suggested that if this decline holds until market close, it will mark GameStop's largest single-day drop since February 4, 2021, when it plummeted 42%. This would also be the fourth worst trading day in the company's history. Another highly volatile stock favored by retail traders, AMC Entertainment, also saw a significant decline, dropping 14% by the end of the livestream.
Gill appeared on camera with bandages on his head, face, and arms, claiming they were fake injuries. The livestream had a casual tone, ending with Gill downing a glass of beer. The background of the broadcast was a live feed of GameStop's stock price, which frequently halted due to trading suspensions, leading Gill to repeatedly ask viewers, "Is my computer frozen?" Within the first five minutes, over 600,000 viewers tuned in.
This was Gill's first video livestream in nearly four years, and fans online wished him an early happy birthday for June 8. Gill mentioned that GameStop is his sole stock holding and acknowledged that his aggressive investment style might not be suitable for everyone. He shared a screenshot showing 5 million shares of GameStop common stock and 120,000 call options.
He expressed confidence in GameStop's billionaire CEO, Ryan Cohen, who is also the founder of pet e-commerce company Chewy, saying, "I believe in this guy, it's a bit of a gut feeling."
Unlike his three-hour livestream in August 2020, where he elaborated on why GameStop was a good value investment, Gill only reiterated that GameStop is in the "second phase" of his investment logic, focusing on "scaling down" and cost-cutting to stabilize its traditional business: "The current focus is on transformation and testing management's capabilities, which is what people should be paying attention to."
Gill stated that no lawyers were present during his livestream, "but maybe I should have one." He emphasized that he has no institutional investor backing and does not collaborate with others or hedge funds. Previously, Citron Research founder Andrew Left speculated that Gill might have gained support from large professional investors due to the scale of his holdings.
In 2021, Gill testified before the U.S. Congress as a key figure in the retail trader versus institutional investor saga and faced multiple class-action lawsuits. One lawsuit accused him of pretending to be a novice trader despite being a licensed financial professional. Gill disappeared from social media until his resurgence in May this year, which triggered another surge in GME and other retail-favored stocks.
During the livestream, Gill admitted he hadn't watched the full movie "Dumb Money," a 2023 American biographical comedy-drama based on the GameStop short squeeze event during the COVID-19 pandemic. He mentioned that the livestream had no set agenda, "just wanted to see what's up with everyone."
Ahead of the livestream, GameStop unexpectedly released its first-quarter earnings four days early, initially scheduled for release after the market close next Tuesday.
The earnings report showed no signs of operational improvement. The company reported net sales of $881.8 million, a 29% year-over-year decline, missing Wall Street's expected range of $900 million to $1.09 billion. Quarterly losses narrowed to $32.3 million from $50.5 million in the same period last year.
GameStop also plans to issue an additional 75 million shares, potentially raising up to $3 billion, without detailing the timeline for the fundraising. In May, GameStop announced the issuance of 45 million shares, raising over $900 million.
Brian Jacobsen, Chief Economist at Annex Wealth Management, noted that GameStop's actions were "seizing the moment." He compared this to AMC Entertainment, another retail stock, which was praised for using stock surges to improve its balance sheet. Last month, AMC raised $250 million by issuing shares at market price.
In 2021, Gill's endorsement helped GameStop's stock soar 1600% before a sharp decline. Since his social media return in early May, GameStop has risen 60% with high volatility, spiking nearly 50% on Thursday due to livestream anticipation. Despite Friday's sharp decline, the stock is up over 20% for the week.
Analysts noted that Gill's GameStop bet earned him $375 million in paper gains from Sunday to Thursday. If GameStop closes above $20 on June 21, he could exercise call options to acquire 12 million shares, making him the fourth-largest shareholder. However, selling these options could lead to a significant drop in GameStop's stock price.
Gill also warned Morgan Stanley's brokerage E-Trade not to delete his account. On Monday, it was reported that Morgan Stanley's Global Financial Crimes division and external legal counsel were discussing whether to stop servicing Gill, citing concerns over potential market manipulation charges.
