GameStop shares were trading lower on Friday, down nearly 5% in midday trade, after jumping 14.4% on Thursday when Keith Gill, the meme-stock pioneer who helped kick-start the initial GameStop craze, provided an update to his Reddit account.
Gill probably exercised some of his call options in GameStop and sold some to raise the funds to increase his stake, analysts said on Friday.
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In the update shared to his Reddit account Thursday, the trader widely known by his online handles ”Roaring Kitty” and “DeepF—kingValue” revealed that he had sold some of his 120,000 call options due to expire on June 21 while buying another 4,001,000 GameStop Corp. shares GME — increasing his position to 9,001,000 shares in the company, from 5,000,000 earlier this week.
Gill’s position was worth more than $262 million as of Thursday’s close, according to a screenshot from his E-Trade brokerage account shared on Reddit.
The 9,001,000-share figure may have held special significance to many of GameStop’s devoted following of retail investors as it was equivalent to the number of shares that company Chairman and Chief Executive Ryan Cohen held in late 2020, shortly before the meme-stock trading frenzy took off. Cohen’s stake has since increased to more than 36 million shares following a 4-for-1 stock split in July 2022, corporate filings show. He has also purchased additional shares on the open market.
Gill may have dedicated a significant amount of his cash reserves to increasing his stake in the videogame retailer as his cash on hand had dwindled to $6.3 million from nearly $30 million, according to an update he shared on Reddit on Monday.
According to the latest numbers from FactSet, Gill’s newly expanded position makes him the fourth-largest shareholder in GameStop, with a 2.1% stake based on the company’s most recent share count per corporate filings. GameStop sold another 75 million shares for just over $2 billion earlier this week.
However, those FactSet numbers are based on the latest 13-F filings from fund managers, which are only accurate as of the end of the first quarter — before Gill kicked off the latest bout of meme-stock madness last month by breaking a three-year silence on his social-media accounts.
Trading volume in GameStop $20 strike calls expiring June 21 spiked Wednesday afternoon and remained elevated on Thursday, stoking speculation that Gill might be dumping some of his contracts.
See: GameStop shares slide as trading surges in options contracts associated with Roaring Kitty
It is likely Gill exercised some of his call options, then sold the rest to raise the money required to purchase the additional 4,001,000 shares, said Steve Sosnick, chief strategist at Interactive Brokers.
Gill’s E-Trade account balance showed his cost basis rising to more than $23 a share, reflecting that his total cost per share was more than $25 with both the price of the shares and the option-contract premium paid factored in.
“It appears he sold a lot of [the calls], then it was probably enough so that he could turn around and exercise the rest,” Sosnick said during a phone interview with MarketWatch.
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Jessica Roberts is a seasoned business writer who deciphers the intricacies of the corporate world. With a focus on finance and entrepreneurship, she provides readers with valuable insights into market trends, startup innovations, and economic developments.
