The GameStop meme stock frenzy is suddenly back. Today (May 13), shares of the video game retailer soared more than 70 percent within hours to top $30, giving flashbacks to its notorious stock rally in early 2021 that kicked start the whole “meme stock” phenomenon. And it seemed to be triggered by the same person. GameStop shares began to surge this morning after “Roaring Kitty,” a user on Reddit’s WallStreetBets forum who inspired GameStop’s 2021 stock mania, posted online for the first time in roughly three years: a captionless image on X depicting a video gamer leaning forward in their chair, ready to play.
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Here’s a bit of backstory: In early 2021, a group of amateur investors on Reddit’s WallStreetBets forum noticed that a couple hedge funds, including Kenneth Griffin’s Citadel and Gabriel Plotkin’s Melvin Capital Management, had heavily shorted GameStop stock, betting on its price to fall. Then, “Roaring Kitty,” whose real name is Keith Gill, encouraged investors on the subreddit to pile in on GameStop shares in a collective attempt to trigger what’s known as a “short squeeze,” where short sellers are forced to buy stocks to cover their positions as prices rise. Their actions drove GameStop’s share price from about $20 in early January 2021 to a peak of nearly $500 by the end of the month, leading to significant financial losses for the involved hedge funds and also forcing brokerages like Robinhood to halt trading in heavily shorted stocks.
Gary Kusin, one of the two co-founders of GameStop, said he and his co-founder, James McCurry, were not surprised at the phenomenon around their company at all. “My co-founder and I were like, ‘Of course it’s happening!’” Kusin told Observer in a recent interview.
“Here’s why it happened,” Kusin, now 73 and a full-time mentor and business advisor, said. “All consumer companies talk about, ‘We need fans. We want to deliver products and customers love so that they become big fans.’ I have never seen a company that had a relationship with its customers like GameStop had until—this is my only analogy—Taylor Swift.”
“Taylor Swift has tens of millions of ‘Swifties’ around the world,” he continued. “If she was a stock and all of a sudden words got out that a hedge fund was shorting Taylor Swift, you would see tens of millions of young people buying one share at a time and completely overwhelming the shorts, and all of a sudden hedge funds are losing billions of dollars. That’s what happened.”
Kusin said video gamers’ strong brand loyalty to GameStop is similar to what Taylor Swift fans have for the singer. “To gamers, GameStop is the fabric of their lives. To gamers in their teens, twenties, thirties and forties, they mark time in their lives by what games came out,” he said. “If you want to say, ‘Where were you in August of 2004?’ They’ll say, ‘Well, that was when World of Warcraft added these new features.’ That’s the relationship that tens of millions of people that bridge decades and generations all had with GameStop.”
