The game station "leading big brother" reappeared in the rivers and lakes, and failed to reproduce the magic, and the account evaporated more than 200 million US dollars in a single day

Tencent News Periscope

2024-06-08 10:23Published on the official account of Beijing Tencent News "Periscope".

Tencent News "Periscope" Ji Zhenyu was sent from Silicon Valley on June 7

Three years ago, a "retail vs. Wall Street" incident around the "Game Station" (GME) stock is still fresh in people's minds, and a legendary Keith Gill emerged in the incident, using a nickname like Roaring Kitty on social platforms, and was called the "leading big brother of retail investors" by the outside world.

Three years later, the "leading brother" is "back in the rivers and lakes", he made the GME stock price rise by more than 80% on the day he re-released the news on the social platform, the market and investors have not forgotten him, in the anticipation of countless retail investors, he began to post screenshots of his account again, compared with three years ago, the size of his stock account has further expanded to hundreds of millions of dollars, compared with three years ago, he bet a larger amount, unchanged, he still buys and only buys one stock - GME.

On June 7, U.S. time, Keith Gill conducted a live broadcast on the personal channel of the video platform Youtube, which attracted as many as 650,000 viewers, and the live broadcast of CNBC, the most well-known financial TV in the United States, was also directly switched to his live channel, and this live broadcast has been a full 3 years since his last live broadcast.

The day before the livestream, Keith Gill's personal investment account totaled nearly $600 million, and if GME's stock price skyrocketed again that day (as many believed), he would be perhaps the first person in history to become a "billionaire" through personal trading.

However, contrary to expectations, GME's stock price not only did not rise sharply on the same day, but instead plummeted under the double negative of GME's poor results and additional shares issued in pre-market hours, and Keith Gill's personal account also experienced a floating profit drawdown of $200 million in one day.

The live broadcast on the 7th not only failed to achieve Keith Gill's legend, but countless ordinary investors who participated in chasing the rally in the past few days faced heavy losses.

During the livestream, Keith Gill appeared to be unresponsive to the ups and downs of the account, saying that he remains optimistic about GME's future growth, but also publicly stated that his high-risk, high-concentration investment approach is not suitable for everyone.

Sherry, a professional who has been engaged in wealth management business at Morgan Stanley for more than 17 years, told Tencent News "Periscope" on the 7th that for ordinary investors, they need to have a clear understanding of their risk appetite, and before making investment decisions, they should also have a clear understanding of the risk they will face next. Even for young people with a strong risk appetite, she doesn't recommend concentrating large amounts of money on one or a few very limited and high-risk targets.

Keith Gill's return has ignited the enthusiasm of retail investors, who are looking forward to the RME stock price surge in early 2021, many of whom have the mentality that they missed the last opportunity and cannot miss this one, but not everyone has the willpower to withstand the huge ups and downs of the account like Keith Gill, and his success as an individual in investing in GME may never be replicated. The plunge in GME's stock price on the 7th once again confirmed the wishful thinking of the market and the huge risks it will face.

The first live broadcast in three years did not "witness a miracle"

Nearly 20 minutes have passed since the original live broadcast time, and Keith Gill, who is known as Roaring Kitty on Youtube and is known as the "leading brother" of GME, has not appeared for a long time, which is the first live broadcast since Keith Gill rolled up the "retail vs. Wall Street" turmoil around GME stocks three years ago, and the audience waiting for the live broadcast has exceeded 150,000 people.

A day ago, Keith Gill posted a screenshot of his stock position showing that his position was only GME, the underlying stock, of which there were 5 million shares of stocks, 120,000 options, and the floating profit of the day alone reached $250 million, and the current total profit of open interest was as high as $380 million, and his total account size reached $586 million.

The game station "leading big brother" reappeared in the rivers and lakes, and failed to reproduce the magic, and the account evaporated more than 200 million US dollars in a single day

If GME's share price continues to rise, his account is expected to exceed $1 billion, making him one of the billionaires.

Therefore, this live broadcast is likely to be the opportunity to witness such a historic moment as a retail investor to the top and become a billionaire, and even CNBC, the most well-known financial TV station in the United States, directly connected this live broadcast to the live broadcast signal.

However, just hours before the live broadcast was booked, GameStop unexpectedly announced its first-quarter earnings ahead of schedule, and the results were not ideal, with GME achieving $880 million in revenue in the first quarter, down 29% year-on-year, and falling short of analysts' expectations of more than $900 million in revenue.

At the same time, Game Stop also announced further plans to raise additional shares, adding 75 million shares to the previous 45 million shares.

Both of these news weighed on GME's stock price, which opened the day with a brief upward surge before turning sharply downward.

Keith finally appeared in the live broadcast room, and Keith in front of the camera was wrapped in bandages and even put a plaster on one of his arms, in order to express his tragic situation of being "beaten" by the market. He said that the reason for being late was because he was preparing for this special outfit.

With the live broadcast, the GME stock price did not appear a magical V-shaped reversal, but continued to fall, Keith briefly responded to some questions from the outside world in the live broadcast, including whether he colluded with hedge funds, whether he has set up his own hedge fund, etc., he gave a negative answer to these questions, he said that he is still just one person operating his own account, and has not cooperated with any institution in any form, nor has he set up a fund, not an institutional investor, still just a " Retail Investors".

He also gave a clear answer to the current position, saying that there is indeed only one stock of GME, and he does not hold any other targets, for the same reason as three years ago, he still believes that this company is in the opportunity of transformation and chooses to be optimistic about the long-term.

He also publicly emphasized in the live broadcast that his investment method is not suitable for everyone, and constantly reminded that it is a very risky way to lose all your funds.

Subsequently, he posted his current position, due to the sharp decline in GME that day, his account also suffered a large loss on the day, including a floating loss of $72 million on the day of GME for 5 million shares, a floating loss of $160 million on the day of 120,000 GME options, and the account also shrank from $586 million after the close of the previous day to the current $350 million because of the floating loss of the day.

Keith in front of the camera didn't seem to care about the large floating profit drawdown of the account that day, and he said that the market went up and down like this.

"Let's move on and see what happens next." Keith said in the live broadcast room.

The livestream attracted more than 600,000 viewers, and related news became the hottest financial news on CNBC's top list of the day. But this first live broadcast in three years has not become a miracle moment to witness a retail investor become a billionaire, but it may well be the end of this round of GME skyrocketing.

The meme stock "frenzy" is back

The memories of the so-called "retail vs. Wall Street" turmoil three years ago are not far away. At the start of 2021, Gamestop's share price soared from less than $20 to nearly $300 in less than two months, and the Wallstreetbets sub-section on the social forum Reddit became a gathering place for retail investors who were keen to hype up concept stocks while viewing institutional investors such as hedge funds as their enemies in the market.

It is such a force that has set off rounds of unprecedented "spectacles" in the capital market in the United States, for example, some stocks that have been abandoned or even shorted by institutions, but there has been a short-term surge under the speculation of retail investors, the most representative of which is GameStop, in this process, the hedge fund Melvin Capital has become the most loss-making counterparty, because Gamestop is a stock that Melvin Capital has shorted in a big way.

The hedge fund eventually went into liquidation, but retail investors were not the real winners, and GME's stock price skyrocketed and then quickly retreated, and the enthusiasm of retail investors finally died down.

But in the process, a user who goes by the username Roaring Kitty on Youtube has become a sought-after opinion leader for many retail investors, who posted a discussion on Reddit about GME stock, and bought $53,000 worth of long options in 2019, and after this round of skyrocketing, his total stock holdings have exceeded $48 million.

Roaring Kitty has become an idol in the minds of countless retail investors, and his success story is the dream of countless people hoping to get rich overnight.

Eventually, Roaring Kitty's true identity was revealed, and his name was Keith Gill, who was from Massachusetts in the eastern United States. Due to the huge impact of this incident, Keith Gill was questioned by the US Congress, but his actions did not constitute any violation of the law, and he was able to get out of the way, and since then he has disappeared, leaving only his legend in the rivers and lakes.

In May 2024, without prior warning, the account Roaring Kitty posted content on the X social platform for the first time in three years, and this tweet did not have any text, just a sketch of the person sitting up straight from leaning back in a chair.

This image alone has revitalized the former community, which many see as a sign of Keith Gill's return, and GME shares rose by 80% on the same day, and even led to a surge in other stocks that retail investors are keen to speculate.

Subsequently, Keith Gill frequently updated the content on social platforms, further confirming the rumors of his return. On the Reddit subforum, he announced his current stock position on June 2, 5 million GME shares and 120,000 GME calls with a strike price of $20 expiring on June 21. His account totalled $210 million on June 2, a significant increase from the $34 million account he had last announced three years earlier, on April 21. Then he continued to publish screenshots of his positions on June 3 and June 6, and his positions did not change at all, still 5 million GME shares and 120,000 call options, but with the rise of GME stock prices, the total amount of accounts on June 6 has reached $580 million.

At this time, a series of speculations and rumors began to spread from the outside world, some people said that Keith Gill had come back this time because he had negotiated cooperation with some institutions, using his personal influence to influence the stock price, so as to help institutions and himself make profits, and some people speculated that he had set up his own hedge fund, which was completely the operation of institutional funds, and was no longer a retail investor.

But in response to the above questions, Keith actually made a brief and direct response to the live broadcast on the 7th, saying that he is still operating his own account, and the screenshots of the account shown are also his own funds, and he has not cooperated with any institution in any form.

Where does GME go from here?

On the 7th, Keith Gill's highly anticipated live broadcast after three years did not bring a magical reversal to GME's stock price, on the contrary, under the influence of GME's poor first financial performance and the news of the additional issuance, GME's stock price fell all the way with his live broadcast, and as of the close of the day, it fell by nearly 40%.

GME's decline on the day also recorded the largest one-day decline for the stock since February 4, 2021. It was also the fourth-worst day in GME history.

Keith Gill, who watched the floating profit of his account evaporate hundreds of millions of dollars in an instant in the live broadcast room, did not show panic or remorse, on the contrary, he publicly stated that he is still optimistic about the long-term development of GME, and believes that GME's business transformation will take longer, such as 3-5 years before substantial progress will appear.

However, he did not give a specific plan for the next step of the position in his hand. For his $5 million GME stock, he could theoretically hold it forever, and if he is consistent with his words and is optimistic about the long-term development of GME, he should also continue to hold this part of the stock, but for the $20 GME call option expiring on June 21, Keith Hill is likely to need to take aggressive adjustment action, because if the GME stock price does not stand above $20 on the expiration date, the value of this part of the option will be completely zero. That is, the $68 million he initially invested in the purchase of this part of the option will all be zeroed.

Keith Gill's practice of using a huge amount of money to reposition a stock is actually the same as what he did 3 years ago, when he was also a heavy position in GME stock and made huge gains, his approach has also attracted many imitations and followers, in Redditt's Wallstreet Bets sub-forum, from time to time retail investors post screenshots of their heavy positions in a stock, these accounts sometimes make huge gains, sometimes face huge losses, Accounts skyrocketing and plummeting from time to time.

Although Keith Gill himself has publicly stated on many occasions that such a high-risk investment method is not suitable for everyone, there are still people who believe in his approach and are willing to bet a lot of money to imitate it.

But in the eyes of professionals, such an approach is not advisable. Sherry, who has more than 17 years of experience in wealth management business at Morgan Stanley, told Tencent News "Periscope" on the 7th that for ordinary investors, before engaging in investment activities, the first thing to consider is their own risk appetite, but even if they are young people with great risk appetite, professional financial advisors will advise him not to bet a large amount of money, especially funds that will affect daily life, on one or several investment targets.

She said that now the "gambling nature" of retail investors participating in the equity market in the market is strong, and the trading volume of terminal options that expire in a short period of time has shown a rapid upward trend in recent years, and many retail investors are also facing the risk of huge losses while trying to win high returns.

For the GME stock, no one can say that this is the beginning of a new round of skyrocketing, as experienced at the beginning of 2021, or it will die down, investors return to rationality, and the stock price will fall again, many people envy Keith Gill from an ordinary retail investor, through an aggressive investment method, to obtain huge returns, and the legendary experience of dozens of times the growth of the account, but perhaps such a "magic" can never be replicated. At the beginning of 2021, Keith's success has a certain inevitability and chance, he was able to withstand the short-term sharp rise and fall of the account, firmly hold the target, and in the case of a large number of investors following, let the GME stock appear "short", further rise, forming a positive cycle, now, although Keith still has a decisive influence on the market, but the market environment and structure are also very different from that time. There have also been many changes in the management and business structure of GME itself, which means that it may be wishful thinking for many people to reproduce the surge in 2021.

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