The Journal. - Did ‘Roaring Kitty’ Just Spark a Meme Stock Sequel?

Episode Date: May 20, 2024

Meme stocks took off last week after an unexpected tweet appeared from “Roaring Kitty,” a social media account associated with former financial consultant Keith Gill. He's credited with igniting the meme stock movement in 2021. WSJ’s Jon Sindreu explains the re-emergence of Roaring Kitty and what it means for the meme stock movement. Further Reading: - ‘Roaring Kitty’ Came Out of Hibernation. Is the Meme Stock Craze Bac k? - Is Roaring Kitty the Internet’s Warren Buffett?  Further Listening: - To the Moon  - Donald Trump’s Meme Stock Moment  Learn more about your ad choices. Visit megaphone.fm/adchoices

Alan Tran has been into stocks since he was around 10 years old. I remember the first investment I made, I was watching Jim Cramer on CNBC talking about Nokia. And I thought that man was a genius at that time. So I told my dad, I was just like, Dad, please, please go buy some Nokia stock for me. And since then, it just, welcome to this journey, right? These days, Alan is a full-time stock trader. And last week, something exciting happened. I was looking at my phone and I saw a notification that Roaring Kitty was back and I was so confused. I have not heard that name in like three years. And I was like, what do you mean Roaring Kitty is back?

Roaring Kitty, the pseudonym of a YouTube stock analyst named Keith Gill, who's been credited with starting the meme stock movement. named Keith Gill, who's been credited with starting the meme stock movement. This movement bubbled up in 2021 when a bunch of investors swapping tips on Reddit drove up the value of some unexpected stocks and thumbed their noses at the financial establishment. For the first time in three years, Roaring Kitty had tweeted. The post was a simple drawing of a person holding a gaming controller and leaning forward in their chair. That was it. Just a picture. Yet what was your reaction? Oh, honestly, I was freaking out. I definitely did scream some things that I probably should not say here, but I was very excited. This tweet sparked a new market rally of some very specific stocks.

Well, what a week it has been. We're talking GameStop, AMC, the meme stock craze. It has a feeling of being back. Shares of GameStop soared more than 70% yesterday. What the heck is going on? What's going on is GameStop soared more than 70% yesterday. What the heck is going on? What's going on is GameStop mania. AMC and BlackBerry joining GameStop in an eye-watering surge. Since then, meme stocks have been on a roaring kitty-induced roller coaster. And that's raising all kinds of questions.

Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh. It's Monday, May 20th. Coming up on the show, diamond hands, YOLO, to the moon. Are meme stocks back? Attention all soccer fans. From Orlando to Los Angeles, take to the fields of the USA for your next vacation. Ready to kick off? Discover exciting games and events.

Plus, find amazing hidden gems in cities full of adventures, delicious food, and diverse cultures. You'll love it so much you'll want to extend your stay beyond the matches. Get the ball rolling on your soccer getaway. Head to visittheusa.com. Keith Gill, a.k.a. Roaring Kitty, is a former financial analyst. He's young, right? Like, he's a guy in his 30s, and he goes by different names. Like, Roaring Kitty is one of them.

Another one is Deep F-ing Value, which was how he was known in the famous subreddit WallStreetBets. This is John Sindreiu, a Wall Street Journal columnist who writes about markets and has been following Keith Gill. He, you know, became one of those many financial analysts who post their opinions on YouTube. Hey, what's up, everybody? Welcome to Roaring Kitty. This channel revolves around live streams where I share my... And he made videos arguing, well, you know, certain companies actually have value, right? GameStop is one of the most compelling asymmetric opportunities in the market today. Really, I don't understand how you could disagree with that.

That's why it's the top position in my portfolio. While many hedge funds were betting against companies like GameStop, Gill saw these companies differently. Wall Street's wrong. Hedge funds are wrong. They believe that these companies are bad. But here I am to make a coherent argument of why actually you should go against the Wall Street establishment and you should actually buy these stocks, right? Well, based on prevailing sentiment, the market, and popular culture,

many think it's a foolish investment. But everyone's wrong. Gil had a playful, irreverent style, and his investing advice challenged the financial establishment. style, and his investing advice challenged the financial establishment. He was arguing that GameStop's struggling video game business had a future, and this appealed to a lot of younger investors, people like Alan Tran. Well, what about Roaring Kitty spoke to you? Honestly, I think it was a lot about his mentality when it came to investing in GameStop, seeing something that nobody else saw, short squeeze potential on GameStop,

a highly undervalued organization, betting on a failing game store, what everybody thought was a relatively riskier play. Individual investors, listening to accounts like Roaring Kitty, seeking out advice on forums like Reddit. John says this is a relatively new phenomenon in the world of investing. This is, I think, a new culture, right? I think the investing culture has gone through several changes. Like if you think about the 1970s, for example, the 1970s were the time of the so-called nifty 50. The nifty 50, there were all those big companies that everybody told you, like your financial advisor, you know, the newspaper, you had to own because

they were the blue chips of the day, the big multinationals, these companies can do no wrong. You should buy them, you know? And people back then, they did not own that many stocks, right? So you got Coca-Cola, you got Procter & Gamble, you got McDonald's, you got Walmart. Many of them are still big companies today. So, you know, it wasn't such a dumb idea. There have been other styles of investing that have become popular, but compared to all of them, this new wave, investing in companies like GameStop, was very different. It's so easy to just

play on your phone and do these things, and then you comment on it, you go on the internet, it's just fun, right? And I think that is the case of Keith Gill, but also the case of many of the people who are betting on stocks via their mobile apps after going on Reddit, which is that they have a certain skepticism for it, right? It's like, well, it's all kind of a big casino. It's all kind of driven by these big players,

these big hedge funds that actually hold a lot of sway by these big companies. Right. It's sort of anti-establishment and also like trying to have fun. So not being like staid and boring financial investing. Yeah, yeah, absolutely. And this movement among small-time investors on Reddit

forums exploded into public view in January of 2021. This GameStop situation is the craziest I think I've ever seen. The company surged as much as 145% today. GameStop shares have now risen some 700%. Almost bordering on the ridiculousness here with regards to the GameStop trade. And when you watched GameStop shares rocket up, what did that feel like? That was honestly a surreal feeling. I did not expect to see GameStop rally the way that it did. Just watching it rally

to what I want to say it hit like 400, $500 a share was the most insane thing that I have seen in the markets up to that point in my trading career. Did you make money on it? Oh, I definitely had a great time trading GME. What'd you do with that cash? I remember right around that time, I bought a BMW and a lot of Pokemon cards. Any Pokemon card in particular? I did buy a first edition Charizard with some of that money, to be honest.

I think I spent like $5,000 on it. $5,000 for a Pokemon card. Did that feel like a huge amount of money? Not really. But GameStop's meteoric rise didn't last. And the meme stock moment seemed to fizzle almost as fast as it started. So when you look back at that time, how did it feel? At this point, it kind of feels surreal and kind of like a dream, you know, because

after seeing the way that, you know, not only the markets, but the world turned out after COVID, just looking back at that time, it just, it felt so different, you know, the way that people interacted with each other, the way that the markets were moving, it just felt so different, you know, the way that people interacted with each other, the way that the markets were moving. And just looking back, it is honestly kind of a dream thinking about, you know, those were the good old days. But the meme stock craze wasn't good for everyone. Some investors lost a lot of money, and this raised questions from regulators and lawmakers. The House Financial Services Committee held a hearing on it and summoned people like Gill, aka Roaring Kitty. Mr. Gill, you are now recognized for five minutes to present your oral

testimony. Thank you, Chairwoman Waters. In that testimony, Gill tried to distance himself from the entire thing. A few things I am not. I'm not a cat. I am not an institutional investor. He said his videos weren't solely responsible for what happened. My post did not cause the movement of billions of dollars into GameStop shares. Here's John again. Well, you know, it wasn't me, right?

Like, this is an internet phenomenon. You know, I'm just one more user, one more influencer, one more, you know, analyst making videos on financial markets. Around that time, Keith Gill essentially stopped posting on social media. Keith Gill essentially stopped posting on social media. And then Roaring Kitty came back to life on May 12th. Yes. Yes. Catching everyone by surprise.

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We don't know that Keith Gill posted that tweet, but that tweet caused the meme stocks to awaken. GameStop started going up, right? And then AMC and like it was enough to give the whole online trading community this you know clarion call to let's go and all of those internet forums went crazy again and all of those old favorites and particularly the big two which were number one GameStopStop, and number two, AMC Entertainment, went back up by an insane amount, like more than twice their price. And, you know, we were back

in that sort of crazy mode of 2021. YOLO. YOLO. YOLO Leaf 1s. Alan says that since Roaring Kitty's tweet, his online chat rooms have been lighting up with talk about GameStop, which is often called by its ticker symbol, GME. The reaction of seeing Roaring Kitty coming back was insane. Everybody, and I mean everybody, was talking about it, talking about GME, talking about AMC prior to market open that day. By the time that I saw that, the markets were still closed.

But at market open on Monday is when I started to purchase both GME and AMC shares. Did you make money? I made a little bit of money in the process. You're going to buy more Pokemon cards? Honestly, probably. Last week, GameStop's shares skyrocketed, nearly tripling in just two days. But by the end of the week, its shares had started drifting down. As this has happened, what has this done to the dormant community that he had rallied?

Well, you know, it's pretty vibrant again. If you go to Reddit, you will see that, you know, people are having quite a lot of fun again. Some people there, they claim to have been invested since the original meme rally. And, you know, now finally are seeing the fruits of their labor, you know, get to work. So, yeah, it's reinvigorated it. And last week, Roaring Kitty kept stoking the fire. After that three-year hiatus, the cryptic tweeting continued. He now posts all the time, but always cryptically. After that three-year hiatus, the cryptic tweeting continued. small, like TikToks. So can we go to Roaring Kitty's Twitter feed? Oh yeah, you should.

Oh, there's Ferris Bueller. Yeah, there is Thanos the Conqueror. There is... Some of it is sort of horror. Yes. I wish I knew all these movies. Which one speaks to you the most? I mean, I thought Thanos the Conqueror

from the supervillain from Marvel was, I mean, to me, was the most? I mean, I thought Thanos the Conqueror from the supervillain from Marvel was, I mean, to me, was the most clear cut. Like, I'm back and I kind of rule over the universe thing. But, you know, I don't want to put memes in his mouth. But that to me was, you know, the return of the Roaring Kitty. Have you been following all of the other tweets that have come out on Roaring Kitty's account?

So I looked at the first couple. I was like, this is really cryptic. I was very confused. And now whenever, like once or twice a day, I'll go look back at the feed to see if he's actually posting anything of any significance. But recently, I've really not been following it as much just because, you know, these have been very cryptic messages that have been posted that I just can't decipher. You can't decipher? What do you think he's trying to say?

I honestly have no clue. I just really want him to just come out and say, this is the time to buy the memes. This is the time to go grab some AMC GME. What would you say to Roaring Kitty if you could talk to him? If I could talk to him right now, I would say, please, for the love of God, post some real content and get the retail traders back into the stock market and move the markets to new all-time highs. Roaring Kitty's most recent post on X is from Friday. It's a clip from the final scene of the movie E.T. Where E.T. gets back on his spaceship and flies away.

That's all for today, Monday, May 20th. The Journal is a co-production of Spotify and The Wall Street Journal. Special thanks to Hannah Miao. Thanks for listening. See you tomorrow.