"Retail investors leader" Keith Gill has been sued! GameStop shareholder Martin Radev accused him of trying to manipulate the company's stock price for his own benefit in a class action lawsuit.$GameStop (GME.US)$In overnight trading, the price of GME fell more than 9%, hitting a daily low of $22.37. Interestingly, the case was voluntarily withdrawn on Monday. At the close, GME's decline narrowed, but still fell more than 5%.
In a proposed class action lawsuit filed last Friday in the Brooklyn federal court in New York, GameStop shareholder Martin Radev accused Gill of trying to manipulate the company's stock price for his own benefit. The lawsuit states:
Before Gill started posting about GME in May, he had already bought 120,000 call options on GME. Prior to Gill's posts, the trading price of GME shares was about $17, but it soared to $48.75 on May 14.
On June 2nd, Gill revealed that he had 5 million shares of GME stock and 120,000 call options expiring on June 21st. By June 13th, Gill's holding of GME had increased to more than 9 million shares, with no unexercised call options.
Gill quietly sold and/or exercised all 120,000 call options on GME, making huge profits and increasing his stake in GME by more than 4 million shares.
Gill's nickname on Reddit is DeepF-Value, and on YouTube and X he is known as Roaring Kitty. He rose to fame in the well-known retail short squeeze case of 2021, centered around GME. After a long silence, he reappeared in May of this year and began posting about GME on the X platform (formerly Twitter).
On Monday, after Gill's holding of online pet food and product retailer, Chewy's 6.6% stake was disclosed, Chewy's stock price soared 10% at one point. However, Chewy gave back all its gains at the overnight close, and fell 6.6%.$Chewy (CHWY.US)$After Gill's holding of 6.6% stake in Chewy was disclosed, Chewy's stock price soared 10% at one point. However, Chewy gave back all its gains at the overnight close, and fell 6.6%.
A filing with the US Securities and Exchange Commission shows that Gill purchased more than 9 million shares of Chewy stock, equivalent to 6.6% of the company. This position made him the third largest shareholder in Chewy. Based on Friday's closing price, these shares were worth over $245 million.
There were signs that Gill was holding Chewy stock. Last Thursday, Gill posted an image of a cartoon dog on social media X that was strikingly similar to the Chewy logo. This caused Chewy's share price to soar by more than 34% during the day, its biggest intraday gain since June 2019 and a new intraday high since July last year. Similar to Monday this week, Chewy's intraday gain last Thursday was also short-lived, closing down all the gains and falling slightly.
It is unclear whether Gill sold his bet on GME to provide funds for the purchase of Chewy stock. After news broke of Gill's massive buy-in, GME's stock price subsequently fell more than 5%, indicating that the market was concerned about this.
It should be noted that there is a close relationship between 'retail investor leader's' flagship work GME and Chewy. GME CEO Ryan Cohen is the founder and CEO of Chewy, and he facilitated PetSmart's acquisition of Chewy in 2017 and subsequently its IPO in 2019.
Cohen joined GME's board of directors with two other Chewy executives in January 2021, which to some extent contributed to the initial surge in GME's stock price. In 2023, Cohen took over as GME's CEO, leading the transformation of this physical electronic game retailer.
In his recent YouTube livestream, Gill said that GME is in the second stage of its restructuring and that it is a bet on Cohen himself, who has been leading the shift to e-commerce.
Edited by Jeffrey