On Monday, it was reported that Keith Gill, the "big brother of retail investors", was sued, and the plaintiffs said that he tried to manipulate the stock price of Game Station (GME).
In a proposed class-action lawsuit filed Friday in federal court in Brooklyn, New York, Martin Radev, a GameInn, shareholder accused Gill of trying to manipulate the company's stock price for his own selfish gain. The lawsuit alleges:
Gill had purchased 120,000 GME call options before he started posting about GME in May. Prior to Gill's post, GME stock was trading at around $17, but spiked to $48.75 on May 14.
On June 2, Gill revealed that he had 5 million GME shares and 120,000 call options expiring on June 21. By June 13, Gill's stake in GME had grown to more than 9 million shares, but there were no unexercised call options.
Gill quietly sold and/or exercised all 120,000 GME call options, making a huge profit and increasing his GME holdings by more than 4 million shares.
Affected by the news of related lawsuits, Game Station (GME) fell more than 9% intraday on Monday, refreshing the daily low of $22.31. Gill did not immediately respond to the news of the indictment.
Interestingly, the case was voluntarily dropped on Monday. By the end of the day, GME's losses had narrowed, but it was also down more than 5%.
Gill's nickname on Reddit is DeepF-Value, and his nickname on YouTube and X is Roaring Kitty. He rose to fame for GME in the 2021 high-profile retail short squeeze case, and reappeared in May this year after a long hiatus, and started posting about GME on Platform X (formerly Twitter) again.
Shares of Chewy surged as much as 10 percent on Monday after Gill's 6.6 percent stake in online pet food and product retailer Chewy was revealed. However, Chewy closed the day giving up all of its gains and falling 6.6%.
A SEC filing shows that Gill bought more than 9 million shares of Chewy, equivalent to a 6.6% stake in the company. This position makes him the third largest shareholder of Chewy. The shares were worth more than $245 million at Friday's closing price.
Gill's position on Chewy has long been symptomatic. Last Thursday, Gill posted an image of a cartoon dog through social media X, which is quite similar to the image of the Chewy logo. This caused Chewy's stock price to soar by more than 34% intraday on the same day, the largest intraday increase since June 2019 and a new intraday high since July last year. Similar to Monday, Chewy's intraday rally on Thursday was short-lived, closing the day with all gains and a slight decline.
It's unclear if Gill sold his stake on GME to fund the purchase of Chewy shares. GME's share price then fell more than 5% after the news of Gill's aggressive purchase of Chewy suggests that the market is worried.
It should be noted that there is a close connection between GME and Chewy, the masterpieces of "Retail Investors". Ryan Cohen, CEO of GME, is the founder and CEO of Chewy, having facilitated PetSmart's acquisition of Chewy in 2017 and its subsequent IPO in 2019.
Cohen joined GME's board of directors in January 2021 along with two other Chewy executives, which partly drove GME's stock price rally in the early days. Cohen takes over as CEO of GME in 2023 to lead the transformation of the brick-and-mortar video game retailer.
In a recent YouTube livestream, Gill said GME is in the second phase of a reinvention, which has become a bet on Cohen himself, who has also been leading the transition to e-commerce.
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