Let’s take on those shorting BPT!!!
How Reddit user ‘Roaring Kitty’ turned his $US53,000 into $US48m
Nathaniel Popper and Kellen Browning
Feb 1, 2021 – 6.43am
KEY POINTS
- Shares in GameStop, the video game retailer, have soared because amateur investors, starting on Reddit, have bet heavily on shares of the company.
- The wave gained momentum in responseto large hedge funds short selling GameStop stock — basically they were betting against the company’s success.
- The sudden demand has driven up the share price from less than $US20 in December to nearly $US200 on Thursday. On paper, anyway.
- It’s not just GameStop. Amateur investors have backed other companies that many big investors had shunned, such as AMC and BlackBerry.
- This bubble around GameStop may force big investors to raise money to cover their losses, or dump shares of other companies.
In mid-2019, a
Reddit user – known as “Roaring Kitty” on some social media accounts – posted a picture on an online forum depicting a single $US53,000 investment in video-game retailer
GameStop.
The post attracted little attention, except from a few people who mocked the bet on the struggling company. “This dude should sell now,” a Reddit user named cmcewen wrote at the time.
A screenshot of Keith Gill from his Roaring Kitty YouTube channel. YouTube
But Roaring Kitty was not deterred. Over the next year, he began tweeting frequently about GameStop and making YouTube and TikTok videos about his investment. He also started livestreaming his
financial ideas. Other Reddit users with monikers like Ackilles and Bowlerguy92 began following his every move and piling into GameStop.
“IF HE IS IN WE ARE IN,” one user wrote on a Reddit board called WallStreetBets last Tuesday.
Roaring Kitty – who is Keith Gill, 34, a former financial educator for an insurance firm in Massachusetts – has now become a central figure in last week’s
sharemarket frenzy. Inspired by him and a small crew of individual investors who gathered around him,
hordes of young online traders took GameStop’s stock on a wild ride, pitting themselves against sophisticated hedge funds and upending Wall Street’s norms in the process.
Their actions –
pushing up GameStop’s price by buying so-called options contracts that offer a cheap way to bet on a stock’s direction – have shocked established investors because Mr Gill and his online comrades are the antithesis of the Wall Street titans who have long ruled the sharemarket.
Working far from well-heeled financial offices, Mr Gill and his fans socialised on Reddit and YouTube and used no-fee online trading platforms like
Robinhood and WeBull. Many were so devoted to their GameStop investment that they spent hours each week chatting in the comments section of Mr Gill’s videos, delving into the company’s financial filings and arcane details about free-cash flow and video game consoles.
Wildly wealthy
Their show of force last week underlines how the financial markets have changed by merging with the world of social media and a younger generation of traders who have been empowered by online platforms. It has also made some in this new generation wildly wealthy.
Last Tuesday, Mr Gill posted a picture on Reddit that showed his $US53,000 bet on GameStop had soared in value to $US48 million ($63 million). (His holdings could not be independently verified.) The post was “upvoted” – the equivalent of being liked – more than 140,000 times by other users. GameStop, which traded at $US4 a year ago, closed on Friday at $US325.
“Your example has literally changed the lives of thousands of ordinary normal people,” a Reddit user named reality_czech
wrote last week to Mr Gill. “Seriously thank you.”
Larry Tabb, the head of market structure research at Bloomberg Intelligence, said the rise of traders like Mr Gill “would have been impossible even a few years ago” because every trade came with a fee and there was less focus on the markets on social media. But with people now stuck at home in the pandemic with easy access to
free trading at online brokerages, “these guys saw an opportunity and they took it”, he said.
Mr Gill did not respond to requests for comment. His online accounts and email addresses were tied to his old office in New Hampshire and his Massachusetts home. Mr Gill’s mother, Elaine, confirmed in a brief phone call that her son was Roaring Kitty.
(20min delay)