Shares of Chewy, the online pet food retailer, surged more than 10% in pre-market trading on Monday following the disclosure that Keith Gill, the investor better known as "Roaring Kitty," has taken a significant stake in the company.
According to a Securities and Exchange Commission (SEC) filing, Gill purchased over 9 million shares, which equates to a 6.6% stake, making him the third-largest shareholder of Chewy. Based on Friday's closing price, this stake is valued at over $245 million.
The SEC filing, which revealed Gill's stake, also included a quirky section where Gill reiterated a statement from his famous 2021 congressional testimony regarding the GameStop trading mania, checking a box that humorously declared, "I am not a cat."
The news of Gill's investment sent Chewy shares soaring before the market opened, reflecting the continued influence of Gill in the world of meme stocks. Last week, Chewy's shares experienced significant volatility after Gill posted an image of a cartoon dog resembling Chewy's logo on social media platform X. This post alone caused shares to spike as much as 34% before settling slightly lower by the end of the trading day.
Gill, known for his pivotal role in the GameStop short squeeze of early 2021, has once again demonstrated his ability to sway market sentiment. His legal name, Keith Gill, became widely known during the GameStop saga when he advocated for retail investors to buy shares and options of the video game retailer, leading to a historic short squeeze that squeezed hedge funds out of their positions.
GameStop shares, however, fell more than 7% in pre-market trading on Monday, potentially reflecting investor concern over Gill shifting his focus and capital to Chewy. The connection between GameStop and Chewy runs deep, with Ryan Cohen, the founder and former CEO of Chewy, currently serving as the CEO of GameStop. Cohen's involvement with GameStop was a major factor in the stock's dramatic rise in 2021, and his leadership continues to be a focal point for investors.
In a recent YouTube livestream, Gill described GameStop as being in the second stage of a reinvention, positioning it as a long-term bet on Cohen's leadership and vision for transitioning the company toward e-commerce. Gill's ability to mobilize retail investors and influence stock movements is reminiscent of his past success with GameStop, suggesting he sees similar potential in Chewy.
Gill's rise to prominence began during the COVID-19 pandemic when his bullish analysis of GameStop on Reddit, under the username "DeepF-ingValue," caught the attention of thousands of retail investors. His analysis and subsequent actions led to a short squeeze that saw GameStop shares skyrocket by over 1,000% in a matter of weeks.
Chewy's recent stock performance also highlights the ongoing volatility and excitement surrounding meme stocks-shares of companies that gain sudden popularity online and are traded heavily by retail investors, often irrespective of the company's underlying business fundamentals. These stocks can experience extreme price swings based on social media activity and retail investor sentiment rather than traditional financial metrics.
The relationship between Chewy and GameStop, strengthened by Cohen's leadership roles in both companies, has created a narrative that resonates with meme stock investors who are drawn to stories of turnaround and underdog success. Gill's endorsement of Cohen's leadership and vision for both companies has further fueled investor enthusiasm.
Despite the positive market reaction, Chewy faces significant challenges. The broader economic environment, competitive pressures, and operational hurdles remain concerns for the company. However, Gill's investment and the subsequent market response underscore the potent mix of retail investor influence and the enduring appeal of charismatic leadership in shaping stock performance.
