GameStop shares plunge even as meme stock booster ‘Roaring Kitty’ says company is on the right track

The meme stock protagonist known as Roaring Kitty told his legions of followers on YouTube on Friday that he still believes GameStop's management team can get the struggling video game retailer back on track.

In a livestream with more than 600,000 views, Roaring Kitty, whose real name is Keith Gill, posted a screenshot of an E-Trade account that appears to show he continues to hold a sizable investment in GameStop. But his remarks failed to prevent the company's shares from plunging nearly 40% – a drop in the value of Gill's investment and a warning about the unpredictability of meme stocks.

Gill's YouTube appearance came hours after GameStop released quarterly results that showed the company still has a long way to go to get back on its feet. GameStop narrowed its losses in the first quarter, but revenue fell as sales of hardware and accessories, software and collectibles declined. GameStop also filed paperwork with securities regulators to sell up to 75 million shares.

Gill, who has experience as a licensed securities broker and financial advisor, was at times confused and unfocused during his lunchtime livestream, which lasted nearly an hour and was his first YouTube video in more than three years.

“No real plan here, I just wanted to check in and see what was going on,” Gill said shortly after the livestream began. He appeared with a sling around his right arm and bandages on his head, face and clothing, an apparent reference to the losses in GameStop shares.

Gill at times reiterated his belief that GameStop CEO Ryan Cohen is taking the right approach to transforming the company from a brick-and-mortar seller of video games and accessories to a successful online gaming company.

“I think I see enough here to believe this guy could do it,” Gill said, but noted there are no guarantees.

“You could lose everything,” he said. “You could lose everything.”

GameStop and Cohen have not disclosed many details about the company's turnaround plan, and Gill has not expressed any ideas of his own.

Overall, the Grapevine, Texas-based company said Friday that it lost $32.3 million, or 11 cents per share, in the period ended May 4. It lost $50.5 million, or 17 cents per share, a year earlier. The adjusted loss was 12 cents per share. Quarterly revenue fell to $881.8 million from $1.24 billion a year earlier. GameStop did not hold a conference call to discuss its financial performance.

As Gill's livestream continued, GameStop shares continued to fall. Just before noon Eastern time, when the livestream was set to begin, the stock had fallen about 20% to $37.29 per share. Just before Gill signed off with “Adios” and “Peace!”, followed by a short outro video featuring kittens, the stock had fallen just over 40% to $27.65 per share.

The New York Stock Exchange suspended trading in GameStop more than 15 times by early Friday afternoon because the stock was unusually volatile.

Gill also stressed during the live stream that he is not working with a hedge fund or a large institution – an allusion to speculation that he may now have the backing of deep-pocketed investors.

He briefly showed a screenshot of an E-Trade portfolio page showing holdings in GameStop, which had fallen by more than $235 million as of Friday.

This activity came about three weeks after Gill appeared online for the first time in three years, driving up the price of GameStop at the time. In May, the account “Roaring Kitty” posted a picture on X of a man sitting forward in his chair – a meme used by gamers when things get serious.

The post on X was followed by a YouTube video from years ago in which Gill defended the struggling company, saying, “That's all for now because I've run out of steam. FYI, here's a quick 4-minute video I put together summarizing the bull case for $GME.”

In its application to sell up to 75 million shares, GameStop noted that its stock's closing price between February 4 and June 6 ranged from $10.01 to $48.75, and daily trading volume ranged from 1.7 million to nearly 207 million shares.

“During this period, we have not observed any material changes in our financial condition or results of operations that would explain this price volatility or trading volume,” the company said. Since January 2021, “the market price of our common stock has been subject to extreme price fluctuations that do not appear to be based on the underlying fundamentals of our business or results of operations.”

GameStop shares closed Friday down 39.4 percent at $28.22.

GameStop was a video game retailer struggling to survive in 2021 as consumers quickly switched from discs to digital downloads. Large hedge funds and big investors on Wall Street bet against the company or sold the stock short, believing the company's price would continue its drastic downward trend.

Gill and his followers changed the course of a company that seemed headed for bankruptcy by buying up thousands of GameStop shares, even though virtually every common metric was telling investors the company was in serious trouble.

This was the beginning of what was known as a “short squeeze,” in which large investors who had bet against GameStop were forced to buy GameStop’s rapidly rising share price to offset their massive losses.