Thanks to Keith Gill, the meme stock segment of the US stock market just got more complicated. Otherwise known as Roaring Kitty on X, or r/DeepFu*kingValue on Reddit, the social media personality/investor was one of the key figures behind the GameStop (NYSE: GME) short squeeze in early 2021.
Following Gill’s social media resurgence, a repeat of that action played out in mid-May, although subdued. A snapshot percolated across social media from Sunday to Monday, triggering another GME stock price spike, from $23.14 to $39.85 per share. The purported account snapshot from Reddit’s r/Superstonk subreddit showed Gill holding 5 million GME shares, worth around $115.7 million on Friday.
More importantly, the snapshot showed Gill’s 120,000 GME call options at a strike price of $20 with an expiry date of June 21st. The purchase price of these contracts was at ~$5.68 per share, potentially netting $6.8 million at the time.
The implication of Keith Gill’s significant ownership of GME stock leads to previous buying of call options. Once the GME stock skyrocketed as he emerged on social media, a likely scenario would entail selling call options and buying GME shares again after the initial bubble burst.
Doing so repeatedly would have ballooned his portfolio. As seen by @unusual_whales’s tracking, these GME calls amounted to $65.7 million. In other words, Gill’s whale status introduced so much volatility that GameStop decided to halt GME trading today, having skyrocketed by 72% in aftermarket opening.
Putting aside the legality of Keith Gill pumping his bags at the expense of retail traders, should investors watch other meme stocks to mimic his success? Here are some prospective candidates.
Trump Media & Technology Group Corp.
Former President Trump’s conviction in NY court greatly boosted his campaign. According to @LeadingReport, Trump’s campaign broke all funding records at just over $200 million after the verdict. This is unsurprising because the verdict was primarily perceived as a subversion of the legal system to pursue short-term political gains.
Case in point, one of the most viral tweets addressing the issue received nearly 73 million views.
Simultaneously, Trump’s social media company, under ticker Trump Media & Technology Group Corp (NASDAQ:DJT), closed 5% down on Friday after a brief spike to $53.50 per share. At $48.85, DJT stock is still far from the 52-week high of $79.38.
Considering the ramp-up of political tensions ahead of the presidential elections and Trump’s more active social media engagement signaled from his first TikTok post, traders should expect more upswing volatility from the present DJT weakness.
However, traders should be agile because timing is everything in the meme stock market.
Beyond Meat
Considering its weak fundamentals, Beyond Meat Inc (NASDAQ:BYND) performed surprisingly well, losing only 4.5% of the value YTD. The company continues to struggle against its main obstacle—expensive meat substitutes against the cheaper real thing. This price disparity is compounded by the novelty of substituting meat in the first place.
At a time when plant-based meats in general are down 19% YoY, this is not a positive signal. However, the company is yet to utilize the rollout of more competitive products, the Beyond IV burgers and beef.
Having shifted from maligned canola oil to avocado oil, the gen-4 products neutralize the main critique of relying on seed oils. If claims of having the “meatiest, juiciest” burgers align with the public reception, BYND could hit previous highs.
In May’s earnings report, Beyond Meat’s CTO hinted at debt or equity funding to power through the revenue bleed. The company would need more capital to extend the runway after a net revenue decline of 18% YoY and a net loss of $54.4 million in Q1’24. Beyond Meat’s debt-to-equity ratio is holding at a relatively high -2.
Nonetheless, if Beyond Meat’s most recent rollout turns the fortunes around, investors could reap big gains. The company’s all-time high was $234 in July 2019 and $19.25 at its 52-week high. At $7.8 per share, BYND stock is closer to its 52-week low of $5.58, making a solid entry for gen-4 burger speculation.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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