Who is Roaring Kitty and why is he causing a GameStop stock surge?

Shares of GameStop, the embattled video game retailer at the center of the 2021 meme stock frenzy, are surging again after the return of the “Roaring Kitty.”

Roaring Kitty, who is legally known as Keith Gill, kicked off another stock market surge this week with his first post on social media in nearly four years. His return sparked a new flood of interest in shares of GameStop, the stock that launched Gill to fame and fortune, along with others favored by an online community of amateur traders.

So who is Roaring Kitty, and why is his return making waves in the stock market?

Investment adviser-turned-internet legend

Gill was born and raised in Brockton, Mass., and graduated from Stonehill College. He was a chartered financial analyst for several years and worked for a range of financial companies before ending up at MassMutual, an insurance and retirement savings firm.

Gill rose to fame, however, through his off-hours presence on social media. Known as The Roaring Kitty on YouTube and “deepf—ingvalue” on the Reddit subforum r/WallStreetBets, Gill became prominent among a quickly growing online community of amateur traders, which exploded amid the shutdowns and stimulus checks of the COVID-19 pandemic.

Gill in 2019 began laying out a case for buying shares of GameStop, which were then worth barely $1. Like many retailers, GameStop saw its sales plunge as e-commerce supplanted shopping malls and gamers flocked to online downloads over physical media.

Even so, Gill saw an opportunity to shock the world — and the billionaire hedge fund owners who placed steep bets against the stock. As the COVID-19 pandemic upended American life and drove a spike of interest in stock trading, more and more amateur traders latched onto Gill’s case for GameStop.

Shares of GameStop jumped from roughly $1 at the start of 2020 to $5 by the end of the year, and then soared to a peak of more than $80 in late January 2021. Gill, who bought thousands of shares of the stock at its bottom, would make millions as amateur traders waged a war against short-sellers.

Anatomy of a short squeeze

The appeal of investing in GameStop was far more than affection or nostalgia for many of Gill’s followers. Amateur traders flocked to GameStop and other companies that hedge funds had “shorted,” making investments that would pay off as the stocks of those firms faltered.

GameStop investors had a plan to flip those bets on their heads by driving the price of shares high enough to force steep losses for those who shorted the company. As investors who shorted the company lost money on their bets, they were also forced to keep buying shares of GameStop at higher prices to fulfill those bets, driving the price even higher.

That strategy, known as a short squeeze, resulted in billions of dollars in losses for hedge fund Melvin Capital, which sought rescue funding from other major hedge funds to stay afloat.

The return

The GameStop short squeeze fizzled out in February 2021 after drawing a wave of backlash from Wall Street and Washington, culminating in Gill and several other major figures of the episode testifying before a House committee.

Gill went silent shortly after his House testimony, and GameStop shares drifted steadily lower, experiencing brief spikes in excitement before continuing their downward trend.

Shares of GameStop appeared to be picking up steam last week even before Gill’s return, rising from roughly $11 on May 1 to $17.46 last Friday. GameStop shares were trading at just more than $44 shortly before the market closed Tuesday, a 176 percent increase over the past five days.

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