GameStop: Understanding Roaring Kitty’s renewed meme trade

Keith Gill — the meme trader behind the curtain of the “Roaring Kitty’ account on X (formerly Twitter) — reignited the cooling embers of May’s meme stock rally, an event traditional traders wrote off. GameStop (GME) soared as high as over 70% in Monday trading, settling down to still close 20% higher, after Gill posted a screenshot of his GameStop holdings and options trades on social media. The legitimacy of the photo has yet to be verified.

Yahoo Finance Head of News Myles Udland comes onto Market Domination Overtime to talk about the core market themes (^DJI, ^IXIC, ^GSPC), retail trading narratives behind prominent meme stocks, and the “meta” psychology many traders seem to be adopting.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Luke Carberry Mogan.

Video Transcript

Yahoo Finance Miles Odland though.

Got him here right on set.

He’s gonna join us more on trading takeaways with Miles was just warming me up.

I walked through some of my talking points.

Um All right, let’s, you know, let’s start with the, the meme in the room, right.

Let’s do it.

Um I mean, I, I think that the, it’s like kinda cute, you know, three weeks ago when this comes back up, it’s been a few years, its sort of like, let’s go back in time and remember the meme trade, uh today, you know, you guys are just talking about the headlines coming over the Wall Street Journal about sec looking into this e trade, thinking about what to do um about this.

And I think it be because you get into this moment where there’s a large group of investors who are just gonna be like, I don’t wanna hear about this anymore.

I don’t care.

It doesn’t matter to me.

I don’t play these names and that’s fine.

And I think that, you know, on the business media side of it, it’s a very alluring story.

There’s still a lot of unanswered questions.

It’s a great story, personalities, right?

Great personalities, they’ve already made the movie.

Uh So, you know, we we can go through that.

But I, I think as we were discussing a little bit earlier, this is the kind, this is a feature now of markets and not only the meme trade, but the retail investors presence in shaping how, you know, certain kinds of big money managers will think about the market for a lot of people.

This is an opportunity to play it.

I think probably on the long side, as much as the short side, obviously, when any stock goes up a lot, you’ve got plenty of shorts who are gonna circle that idea.

Uh The short interest around a lot of these meme names, gamestop A MC, others uh is not, you know, has remained considerable over the last few years.

Story continues

It’s not like people have completely lost interest in these stocks as you know, call them sort of play things of investors.

And while it can be sort of, you know, it’s not a cute groundhog day anymore, right?

It’s a little bit like tired and it’s 2024.

We’re still doing this.

But I there is something notable about the role that, you know, let’s call them gags, retail focused gags play in financial markets.

We now have crypto available to go into 401 Ks.

That whole market is kind of a, you know, it’s kind of a bit, it’s kind of 1/4 wall breaking joke.

Well, what’s sort of interesting to me about this is, yes, whatever the subject of his trading is like, you look at what Keith Gill is doing.

And I mean, I think about lots of other famous money managers who filed 13 Fs who on TV, and who people follow what they’re doing, who speak at the Stone conference and people then chase those various trades.

And so it’s interesting to me that now there is someone outside of the traditional, I mean, and this was part of the narrative in 2021 of course, but now that like he’s that guy and he can just say this and then, you know, that goes up.

Well, um the first part makes me think the idea that um you know, I don’t know exactly what kind of numbers buffett’s put around it, but he said things the effect of like, if I managed way less money, I would do way better, right?

Because no one would know that it’s him doing and there’s plenty of opportunities out there.

I think this is why, you know, long only portfolio managers still exist.

People are are, I mean, it’s not, I’m just not saying this, like there are lots of stocks that are going to outperform the market in what proportion do you hold them?

Do you identify them and so on and so forth?

That’s why this business is so alluring for so many.

But you know, to your second point about how people follow all these individuals.

I think that the meme stock trade has brought up like 1/4 wall.

I mean, I know I just said it but there’s like a there’s a reflexivity around the awareness of.

So I follow Keith Gill, therefore other people follow them.

Therefore, I can short those people.

Therefore I can short, I can go long against the people shorting him.

This is very like meta, like it’s like a meta, meta meta around where the meme stock fits into investor psycho.

And you know, the reddit aspect of it, the social trading aspect of it, all these things that get very buzzy but are meaningful parts of the story.

I do think bring in some unique elements to it where it is not just a hey, this stuff always happens in financial markets.

I think something a little bit different is happening with this specific kind of trade.

And I don’t think this is the last time we’re gonna be talking about gamestop and probably not the last memes we’ll ever find.

What did you think?

We were also talking that we were talking Chris Murphy from Susquehanna earlier miles.

And he was kind of pointing out some differences between now and 2021 and one point he made, which is a good one.

Is that 2021 there, there was that kind of mania because it was always like, OK, who’s gonna get it next.

You know what I mean?

Like who’s got the bull’s eye in their back next?

Whereas this time Chris was pointing out it seems more contained.

Yeah, there’s definitely the, the, the field of potential meme stocks has been, you know, contained to use his word.

And I think the other part of it is remember in 2021 it was, it was like very, I don’t know, cutting edge or whatever.

But the first time someone came out and said these companies should issue stock like, you know, the stock went up a lot, you should do something with it.

And you know, I remember uh certain commentators going on certain networks hammering the CFO of this company every day.

And I was like, hey, you know, that is a good point.

They probably should raise capital and now guess what gamestop did last week, they went out and they raised capital and it’s the very cynical side of this.

And it’s like, yeah, of course, they’re gonna do that.

And so to that point, Josh, like, I think the field is narrower because, you know, that’s the loot of the shareholders.

So why would you go trying to find the next meme name when you’re just gonna get the looted?

The second it quote unquote works.

So it changes the nature of that trade a little bit.

And then I guess one of your other takeaways, although less, less fun to talk about it with I mean, but important, probably more important, more important, probably a little more important for your back to reality drop in bond yields today that as we keep talking about did not give a meaningful lift to stocks because if yields are going down because the economy is slowing down, that’s not maybe so great.

Yeah.

You know, the last, let’s call it two weeks of Wall Street Notes feels like there’s been just a lot more conversation around what’s happening and specifically in the treasury market.

And I think viewing treasuries as an anticipatory mechanism around what the fed is gonna do.

We’re gonna get, you know, a new dot Plot next Wednesday.

So that’s coming up extremely quickly.

We, the fed sees itself headed and then, yeah, the, you know, the PM is that we got earlier this morning opened up that question of just how healthy is the US economy a couple ways to read the retailer comments we’ve gotten in the last few weeks, but certainly, uh enough critical mass around retail executives saying they see some signs of concern.

So you’ve got that slow down the economy.

You’ve got where are rates headed?

Um Are they headed that direction for the right reasons?

And, you know, then that brings me back to like this is one of the months of the year.

You’re a little bit of a news vacuum.

And so, you know, you start looking at the other thing, where’s the other thing six weeks till we have earnings again.

So we’ll get through the fed and then it’s three weeks of, you know, kind of looking at each other as we get through.

Well, fingers crossed for high school graduation and stuff like this and send the kids off to camp and then we will do bank earnings on July 11th or 12th.

Dads and grads, baby.

That’s it.

This is the time of year, you know, you know, let’s break out your polos in the grill.

That’s it.

We’re on it.

You’re very on theme.

Thanks a lot.