Morgan Stanley’s online trading platform is considering kicking Roaring Kitty to the curb.
The Wall Street Journal, citing unnamed sources familiar with the matter, reports that E*Trade is weighing removing Keith Gill, the investor widely known by his social media persona “Roaring Kitty,” over concerns of stock manipulation stemming from purchases of GameStop stock shortly before kicking off a renewed meme stock frenzy last month.
Gill gained national attention during the COVID-19 pandemic for his bullish analysis of GameStop on Reddit, and drove the first short squeeze of the video game retailer’s stock in early 2021 — which saw its shares surge more than 1,000% in a matter of weeks.
Last month, he did it again when he posted a meme on X that his followers interpreted as a sign to start buying up GameStop shares — and they did. Although the craze fizzled out within a few days, Roaring Kitty made himself heard on Sunday when he posted a screenshot of his portfolio to Reddit forum r/Superstonk showing that he still owned 5 million shares of the retailer worth almost $116 million as of Friday’s closing price of $23.14 per share.
GameStop stock surged more than 100%, before closing out Monday up 21%. Gill posted another screenshot of his portfolio late Monday, showing that he gained $78.6 million in just one trading day, mainly from the call options.
Gill goes by “DeepF———Value” on Reddit, and by Roaring Kitty on X and YouTube, where he has a combined roughly 2 million followers. He later posted a picture of the reverse card from the card game “Uno” on X.
E*Trade is worried that Gill is leveraging his power to send GameStop stock soaring and is potentially manipulating the stock for his own benefit, The Journal reports — but the firm is also concerned that removing Gill will draw unnecessary attention from his legion of followers. The trading platform’s employees reportedly saw that he had bought call options — which give a trader the right to buy the stock by a certain date at a stated price — before posting his first meme in three years on May 12. With some of those options expiring last week, Gill likely made a profit from the trades and the squeezed stock.
Morgan Stanley declined Quartz’s request for comment.
Shares of the video game retailer were down almost 3% in pre-market trading Tuesday.
GameStop’s rollercoaster month
GameStop said last month that it sold 45 million shares of common stock for approximately $933.4 million. It had disclosed that it would be carrying out an “at-the-market” equity offering, meaning that its newly issued shares were sold at market prices. At the time, GameStop warned that investors who purchase shares in the offering could lose a “significant portion” of their investments due to the stock’s “extreme price fluctuations.”
The company also disclosed in regulatory filings that it’s projecting quarterly sales to drop to $872-$892 million, down from $1.24 billion in the same quarter last year. GameStop also projected net losses between $27 million to $37 million for the quarter, an improvement from $50.5 million in losses a year earlier.