Bittime - In the world of retail stock trading, the name Roaring Kitty or known by his real name Keith Gill has become a legend. His incredible story of how he turned $53,000 (approximately IDR 853,300,000) into more than $46 million (approximately IDR 741,600,000,000) throughGameStop (GME).
This has become an inspiration for many retail investors. After three years in hiding, he is back with a new wave of MEME, both in US stocks and cryptocurrencies.
The Beginning of Keith Gill's Journey
Keith Gill was born in 1986, did not come from a rich family and did not graduate from a well-known university. During his college years, he was an athletic star.
After graduating in 2009, he worked at a relative's startup making stock analysis software, before changing jobs several times. In 2019, he began working at Massachusetts Mutual Life Insurance Company (MassMutual).
Keith Gill's Career in Social Media
In 2014, Gill created a Twitter account with the goal of "discovering stocks and exploiting investment opportunities."
A year later, he joined YouTube and regularly does live broadcasts showcasing his trading portfolio and market research. In 2019, he also joined Reddit under the username DFV (DeepFuckingValue).
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Invest in GameStop
The peak of Keith Gill's legendary story occurred in 2019 when he started buying GME shares. He feels that GME shares are very undervalued.
At that time, there was also a Wall Street giant , Michael Burry, who was optimistic about GME. Burry, known as the main character in "The Big Short," fought Wall Street and made huge profits from short selling subprime debt.
However, Burry was later found to have sold all his shares before GME skyrocketed (in the fourth quarter of 2020).
Announcement on WallstreetBets
Initially, Keith Gill bought GME shares worth around $53,000 (around IDR 853,300,000) with a position price of $5 (around IDR 80,500). He then began announcing his positions on the WallstreetBets sub-forum on Reddit, as well as promoting them on YouTube and Twitter, livestreaming his portfolio and investment strategies.
At the time, GameStop was still a "troubled company" mired in financial difficulties, losing more than $80 million (approximately IDR 1,288,000,000,000) in one quarter, and sales declining 25% year over year.
Even layoffs and store closures haven't helped much.
Someone left a comment under his post: "Bro, what made you invest $53,000 (around Rp. 853,300,000) in GameStop?" Keith Gill responded that he had always believed in the company's future potential.
Keith Gill's Discovery That Changed Everything
In July 2020, Gill made a discovery that changed his fortunes: the number of GME shares sold short reached 150% of the total shares outstanding.
In general, to conduct short selling, an institution borrows shares, sells them, and then buys the shares back to return them on a predetermined date.
If stock prices fall, hedge funds can “sell high and buy low” to make up the difference. However, if the stock price rises, short sellers will have to buy shares to return them, which can push the stock price up and cause a “short squeeze.”
Shareholders can benefit from this situation. Keith Gill saw this opportunity. Short sellers may be at risk of a short squeeze, while long sellers have the opportunity to make money.
Action on WallstreetBets and Intervention from Chewy and Ryan Cohen
Gill posted his discovery on the WSB forum and invited netizens to participate. For Reddit users, GameStop has a special meaning: the place where they bought their childhood games.
Their biggest opponent is Melvin Capital, a hedge fund known for its short selling strategy.
In January 2021, the famous e-commerce company Chewy announced that it would invest in GME, and its co-founder Ryan Cohen joined GME's board of directors.
Fueled by this positive news, more and more retail investors are buying GME shares. The share price rose up to 50% in one day, with an increase of almost 700% in a month.
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Pressure on Melvin Capital
Amidst this sharp rise, Melvin Capital could barely survive. Legendary hedge fund Citron helped by injecting capital into Melvin Capital and announcing they would short together.
Wall Street's backlash is increasingly fueling resistance from retail investors. This is also a war. The slogan at WSB echoed, Short sellers must die!
On January 27, Melvin Capital announced it would close its position and give up on short selling.
Within a month, its assets evaporated by more than 50%, with losses reaching $6.8 billion (around IDR 109,480,000,000,000). This became the hedge fund with the craziest drop in net value since the 2008 financial crisis.
Trading Restrictions by Robinhood
At this point, retail investors achieved a temporary victory, but suddenly Robinhood, a trading platform commonly used by retail investors, announced trading restrictions. Retail investors were unable to purchase GME shares, and the share price fell accordingly.
Wall Street Cheats
This was seen as Wall Street starting to play dirty and not obey the rules. The long and short GME war developed into Wall Street VS retail investors, a battle between the classes.
In this process, Keith Gill is considered the leader. Although it was later discovered that the forces behind GME were not purely retail investors, Gill was pushed to the forefront by the times and became a role model and leader of the retail investor movement, and he also got the biggest pot of gold in his life.
Keith Gill's Extraordinary Profits
In 2019, $5 (around Rp. 80,500) opened a position in $GME; in 2021, $GME reached a peak of $483 (around IDR 7,776,300).
In January 2021, a screenshot of Keith Gill's performance posted on WSB showed that his total earnings from GME shares and options exceeded $31.47 million (approximately IDR 506,607,000,000), and his cumulative position reached $46 million (approximately IDR 741,600,000,000) .
Conclusion
In a market where MEME is becoming mainstream, powerful KOLs (or influencers) have the ability to influence the market. Be it Musk, Keith Gill, or Ansem, they are all superstars in the MEME cycle.
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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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