Yesterday, even in the traditional stock markets, there was pure madness following some news regarding Gamestop (GME) and the price of its shares.
If the crypto markets are often accused of being manipulated, and of being dominated by pure speculation, what happened yesterday on the traditional stock exchanges is no less.
The news that made the price of GameStop (GME) shares jump
Yesterday, in a single trading day, the price of the GME stock rose by 47%.
Now the total cumulative gain since the end of May is over 100%. In other words, it has more than doubled in less than a week.
The first leap was made on Monday, when during the pre-market it recorded a +100% following news concerning Roaring Kitty.
At this moment it is precisely Roaring Kitty making the difference. In reality, this is obviously a pseudonym, because his real name is Keith Gill.
He is a 38-year-old American financial analyst and investor who often publishes content online about GameStop, particularly on Reddit and YouTube, where he goes by the name Roaring Kitty.
With Monday’s jump, the price of GME shares had risen from $23 to $40, only to fall back below $26 the next day.
Already on Wednesday it had returned above $30, but yesterday it even jumped above $46. On May 24, about two weeks ago, it was at $18.
The boom of yesterday was triggered by the simple news that Roaring Kitty has scheduled a live for today.
JUST IN: GameStop $GME up 33% after Roaring Kitty scheduled a YouTube livestream for tomorrow. pic.twitter.com/Zsq9recjYA
— Watcher.Guru (@WatcherGuru) June 6, 2024
The speculation of Keith Gill
In cases like these, it would be totally wrong to talk about investments, because it is purely and simply short-term, or very short-term, speculations on so-called meme stocks.
Just on Monday, June 3, before the reopening of the stock markets after the weekend break, it was discovered that Keith Gill, aka Roaring Kitty, had opened a leveraged position on the price of GME shares.
Thanks to the price increase, triggered precisely by the news related to his speculation, he could become a billionaire.
BREAKING: "Roaring Kitty" is set to be a billionaire as GameStop stock, $GME, surges to $67.50/share in after hours trading.
If $GME opens at or above current levels tomorrow, his shares will be worth ~$325 million and options worth ~$700 million for a combined ~$1 billion.… pic.twitter.com/UqnUPoShnv
— The Kobeissi Letter (@KobeissiLetter) June 6, 2024
In fact, in the event that the price of GameStop shares should rise even up to $67.5, his call option could yield him almost 700 million dollars, which would be added to the 350 million dollars value of his GME shares.
If such a scenario occurs, he will have earned 850 million dollars with this single bet.
The accusations of market manipulation
Gill cannot be accused of insider trading, because he has nothing to do with the company GameStop.
However, he can be accused of market manipulation.
The law indeed prohibits the fraudulent increase and decrease of prices on the stock exchange, and in particular the practice of publishing misleading news or engaging in artifices aimed at causing an increase or a decrease in the price.
In the case of Gill, no real news has been published, but it is evident that he has engaged in artifices to increase the price.
From a strictly legal point of view, it is not at all certain that the practices used by Gill are to be considered definitely illegal, and therefore punishable by law, on the other hand it is evident that, at least involuntarily, he has in fact momentarily manipulated the price of GME shares.
It should not be forgotten that these are meme stocks, that is, stocks that have gained popularity thanks to the sentiment of communities on social media, and whose success in the market is not due to the successes of the company to which they belong.
GameStop has had problems since 2020, and at the beginning of 2021 its shares effectively became meme stock when a somewhat similar action caused the price to jump from $4 to $120 in ten days.
Even that episode came under scrutiny by the authorities, but evidently it is a phenomenon that is very difficult to stop.
Subsequently, the price of GME shares had fallen back below $10 around mid-April of this year, and at that point, a new wave of news began that made it rise again.
Although from the current price level 120$ is still distant, 67.5$ is not that far, even if the peak at the end of 2021 was not higher than 64$.
In the event that Gill’s bet today turns out to be wrong, it might not have major consequences from a legal standpoint, but if it turns out to be successful, it is possible that someone might want to check whether his behavior can be considered lawful or not.
