Meme stock world awaits 'Roaring Kitty" livestream, GameStop drops after stock offering (updated)

KOSS

07/06/2024 12:20

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      Roaring Kitty livestream scheduled for 12 pm ET
    

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      GameStop announces plans to raise more than $3 bln 
Company releases Q1 earnings ahead of schedule     
    

  
 (Adds details on quarterly results in paragraph 4,analyst
comment in paragraph 5; updates share movement throughout)
    By David Randall and Sruthi Shankar
       June 7 (Reuters) - Meme stock traders will be glued to
their screens on Friday, when Keith Gill, online influencer and
a key figure behind the eye-popping rally in the shares of
GameStop  GME.N  in 2021,  hosts his first YouTube livestream in
three years.
    The "Roaring Kitty" channel on YouTube, which Gill used to
post the videos, showed a livestream schedule for 12 pm ET,
boosting the shares of video game retailer more than 47% in the
previous session.
    But they tumbled 9.4% to $42.32 before the bell on Friday
after GameStop reported quarterly earnings four days ahead of
schedule and announced plans to raise more than $3 billion by
selling up to 75 million shares.
    GameStop's first-quarter net sales declined as it grapples
with customers turning to e-commerce firms for buying video
games and collectibles.
    "No matter how much noise somebody makes on whatever
platform, at some stage the company will have to generate
profits and particularly cash flow to sustain that valuation,"
said Russ Mould, investment director at AJ Bell.
    "The question that everybody needs to ask is has anything
fundamentally changed about the company's competitive position
in the last month?" 
    In 2021, Gill's championing of GameStop helped its shares
rally by as much as 1,600% before they tumbled. He won a
cult-like following among some investors and notoriety with
others. 
    His apparent return sent GameStop shares soaring in recent
weeks. They rose nearly 150% since May 13, when an account on X
linked to Gill began posting a series of memes that some
investors viewed as a sign of him being bullish on the company. 
    GameStop rose 21% on June 3 after Gill's Reddit account
posted a screenshot showing a $116 million bet on the stock. The
post, the first from the account in three years, showed a
position of 120,000 GameStop June 21 call options at a strike
price of $20, worth $65.7 million at last Friday's close. 
    Other names associated with the meme stock phenomenon also
fell  on Friday, with AMC Entertainment  AMC.N  slipping 2.1%
and headphone maker Koss  KOSS.O  down 12.3% after recording
double-digit gains in the prior session.
    
    NOT LIKE 2021
    While the 2021 rally was fueled in part by retail investors
banding together to punish hedge funds that had taken bearish
positions in GameStop and other companies, some analysts said
the same degree of fervor appears to be missing this time. 
    "Despite Keith Gill's renewed weekend appearance and ensuing
GME price spike, retail traders do not look to be sticking
around too long in the trade," analysts at Vanda Track wrote in
a note earlier this week. 
    At the same time, Vanda said, "high-frequency institutional
traders are front-running retail's efforts, and performance data
demonstrate that this is indeed not turning into a widespread
bullish phenomenon for the meme stocks cohort."
    Short interest in the stock stood at 19.87% of free float,
according to data and analytics company Ortex.
    Broader market conditions do not reflect the same
speculative energy as they did in 2021, said Jason Draho, head
of Asset Allocation Americas at UBS Global Wealth Management. 
    The IPO market remains dormant, while M&A activity is mild,
he said. "Meme stock activity isn't anywhere near it was in
2021, even though we are seeing dramatic one-day moves."

 (Reporting by David Randall in New York and Sruthi Shankar,
Shristi Achar A and Jaspreet Singh in Bengaluru; Editing by Ira
Iosebashvili, David Gregorio and Arun Koyyur)
 ((David.Randall@thomsonreuters.com; 646-223-6607; Reuters
Messaging: david.randall.thomsonreuters.com@reuters.net))