WILMINGTON — “IF HE'S STILL IN, I’M STILL IN,” was the constant refrain from followers of Roaring Kitty, the YouTube personality whose enthusiasm about buying stock in video-game retailer GameStop made him an icon in the social media frenzy that shocked Wall Street last week.
His hometown newspaper, The Enterprise, dubbed him a “Brockton legend,” stirring dreams about how the former high school track champion might use his newfound riches to build the city an indoor track. Hollywood studios started sketching out movie proposals about the small-pocketed investors who banded together on social media to vault a troubled brick-and-mortar chain “to the moon” and punish hedge funds that were betting on its failure.
But what was a big victory for Roaring Kitty, a 34-year-old whose real name is Keith Gill, is turning into hardship for followers who jumped on the bandwagon and took risky bets on GameStop's rollercoaster ride in the stock market.
GameStop shares closed Friday at $63.77 — up $10.27 (19%) on the day but way down from a high of $483 a week ago. But shares are still well above the $17 they fetched at the start of the year.
The GameStop saga is also raising complications for Gill, who now faces an inquiry from a Massachusetts state regulator over potential conflicts of interest because of his work as a licensed securities broker and “financial wellness education director” for insurance company MassMutual. The regulator's letter to MassMutual was first reported by The New York Times.
The company told the Secretary of the Commonwealth's office that it had previously denied a request from Gill to engage in outside business activity. His last day at the job was Jan. 28.
Gill is also on a list of people who might be called to Congress to testify, said Democratic Rep. Maxine Waters, who leads the House Committee on Financial Services. “I want him here,” she told the Cheddar financial news channel.
Similarly, the heads of several regulatory agencies, including the Securities and Exchange Commission, the Federal Reserve Board and others, met with Treasury Secretary Janet Yellen to discuss “recent financial market volatility.”
Doubts emerged about GameStop and its online boosters this week as the stock plunged, spelling trouble for novice investors who got in too late, bought too high and found themselves caught up in an epic story of battling against the 1%.
“I was a little late to the game," said Will Binette, 21, of Albuquerque, New Mexico, who bought one share of GameStop last week when it was $380. “I don’t really care that I’m losing that much money. It’s about sending a message and redistributing the wealth.”
Binette doesn't fault Gill, calling him a smart investor who made a “phenomenal profit." Instead, Binette said, it was the broader community of investors on the Reddit forum WallStreetBets that persuaded him “we can get back at Wall Street for the 2008 crash.”
Gill's closest followers, who watched Reddit each day for a spreadsheet he posts of his current GameStop holdings, know that it's likely he has already sold off enough options along the way to make hefty profits — even though he's indicated that he still holds tens of thousands of shares that are potentially worth tens of millions of dollars. The Associated Press was unable to independently verify those claims.
Many smaller investors use options to play the market. One such contract gives an investor the right to sell a stock at a later date at a certain price. If the share price drops, the holder can exercise the option and sell the share at the higher option price. Such options help investors protect their portfolios against sharp price declines.
Gill indicated Wednesday he’s “gonna back off” the daily updates, without explaining why.
“I don’t believe the movement will be jeopardized even if Roaring Kitty sells, which I know he won’t,” said Jenn Kruza, who first stumbled into Gill's orbit when she joined one of his livestream chats on YouTube in September.
AP Business Writer Alex Veiga contributed to this report from Los Angeles.
The Link LonkFebruary 06, 2021 at 06:24AM
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