(Bloomberg) — The latest social media rant this week from the man known as Roaring Kitty sent traders frantically reading a cartoon featuring, of all things, a dog.
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Was Keith Gill going WOOF? (Petco Health & Wellness Co.) Maybe PET? (Wag! Group Co.) Or, perhaps, the company that was co-founded by Ryan Cohen, GameStop Corp.’s current chief executive, CHWY? (Chewy Inc.)
His legions of retailers – following @TheRoaringKitty on X and u/DeepF – – ingValue on Reddit – didn’t wait to find out. Each stock jumped at least 12% after the dog posted, triggering trading halts that in pre-meme years were usually reserved for merger news or management changes.
Like when Gill recreated a bout of GameStop fever with a photo of a gamer leaning against his controller, the episode has put longtime market watchers on notice about the influence of a retail executive with the power to bending the markets to their potential. personal gain. It’s one thing when there are obvious lies or misrepresentations, but how, they ask, can the authorities ever blame someone for what Redditors or bots read into a meme?
Or, to put it bluntly: who exactly does this guy think – and the traders who follow him?
“Crypto people are probably laughing at the capital market. Someone posts a picture of a dog and stocks tear up,” said Joseph Saluzzi, partner and co-head of equity trading at Themis Trading. “We talk about how bad the crypto market is — just unregulated nonsense — but here we are. “
Now there is growing concern that this year’s meme frenzy will end badly for the amateur crowd, once again. While Gill has long made a fundamental case for GameStop, it’s less clear how to interpret his potential attack on pet companies.
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Of course, Elon Musk, a fellow geek, can affect the price of dogecoin with a simple mention on Saturday Night Live, or derail Tesla Inc.’s stock. making a survey about selling some of his stock. But with a fortune of more than $200 billion and a handful of related companies under his control, he has the financial power to move markets.
Gill though? He earned a CFA charter and was previously employed by Massachusetts Mutual Life Insurance Co., in an outstanding office job. However, in the era of meme stocks that he helped usher in, he has by all accounts created a considerable fortune.
The latest market moves suggest that at least some Roaring Kitty fatigue is setting in. Shares of Petco closed little changed on Thursday and ended the week just 6.8% higher than where they started. Move! The group, after posting its biggest daily gain in 10 months at one point on Thursday, fell 4.2% on Friday. Chewy, which nearly hit a one-year high on Tuesday, ended the week down 6.2%.
“It’s clear that his influence is getting shorter and shorter with Chewy down since yesterday’s dog meme,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “The more the trading community sees Roaring Kitty’s story (tweet, stock up, stock down), the shorter the timeline for each interaction becomes.”
The speed with which pet-related stocks rallied — and then reversed — raises questions about traders heeding Gill’s purportedly populist appeal more than three years ago. Back then, he and a group of Redditors wreaked havoc on short-selling hedge funds and provided a windfall for the retail crowd.
That party didn’t last long. When dangerous spirits took a turn in 2022, amateur traders retraced all of their meme-era gains within months, Morgan Stanley analysis showed at the time.
“If hedge funds aggressively fund short Chewy, GameStop and other meme stocks, you’re essentially trading against an 800-pound gorilla,” said Oliver Pursche, senior vice president and advisor at Wealthspire Advisors. “If you’re betting your retirement money on this, I’ll say a prayer for you and wish you well.”
That he has the appetite to ride on volatile meme stocks has caught some viewers by surprise, given the different economic backdrop from his initial enthusiasm in 2021. The buffer of excess pandemic savings has been depleted and then some, help reduce consumer firepower.
But in the U.S. market at least, there appears to be plenty of ammunition to lift the broad indexes — and, at least for a moment, the Roaring Kitty stock of the day.
“The development to speculate is still very much alive,” Danielle DiMartino Booth, CEO and chief strategist at QI Research, told Bloomberg Radio. “People are still ready to gamble on the stock market as if the pandemic just hit the shores. It shows you again that there is a great willingness to take risks.”
–With assistance from Emily Graffeo, Carmen Reinicke and Stefani Reynolds.
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