For the second time this year, GameStop's stock is going on a wild ride, and at the forefront of this maelstrom once again is Keith Gill-Roaring Kitty, or Deep F---ing Value. Gill was a legend in the first GameStop rally back in 2021; he's now back, this time with a significant stake in the company. Already, his latest move has created quite an emotional stir and a spate of debates on Wall Street and among retail traders.
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I remember the first GameStop frenzy quite clearly. This was a period of small investors who came together, basically based on a rebellion against substantial hedge funds that had shorted the stock. Gill was the poster boy, seemingly an ordinary man who took the giants on and triumphed in a big way. It felt like a victory for the little guy—a David versus Goliath story, so to speak. But now, things just feel different. Gill's portfolio recently peaked at more than $550 million, a staggering sum that gives him enormous power and influence. He's been buying more GameStop shares, even as their value has been seesawed, and some people have started to ask questions about motives. Is he still the folk hero challenging Wall Street?
My principal question is whether what Gill does constitutes market manipulation. That kind of following and influence when posting on trades of their own can make prices move dramatically. Some will argue that this is akin to a "pump and dump" scheme in which someone artificially inflates the price to sell at a profit. It is a grave accusation, and it has also spawned further discussion about the ethics of trading in an age dominated by social media. I can understand why people are cynical. The nature of retail trading has essentially changed since 2021. It was easier to root for Gill and the Reddit pack as they charged against the hedge funds. Now, with sophisticated investors, not to mention even hedge funds, ensnared in the new dynamics, one hardly sees that so-called underdog anymore. The line between the little guy and the big institution has become fuzzy.
Also interesting is how the perception of Gill himself seems to have changed. In 2021, many lionized him as a hero, a symbol of resistance against the financial elite. Today, some of those same people look askance at him. They wonder if his return to the limelight—like so many times before—is little more than another attempt to manipulate the market for his own gain. This shift in sentiment speaks to a broader distrust of market influencers and the platforms they operate on.
Compared to all these red flags, however, Gill has broken no laws, nor has he been convicted of any wrongdoing. He maintains this is merely him activating his investment the same as he did in 2021. And, as legal experts have noted, it's hard to prove one of market manipulation: specific evidence of intent to deceive is required. Gill's transparency about trades and conviction about GameStop's value help his case.
But regulation is only going to get tighter. Brokerages like E*Trade have recently started banning influential accounts from their platforms to avoid possible manipulation. This raises fundamental questions about the future of retail trading and the role of such social media influencers in financial markets. Will these platforms allow influential figures to continue moving market sentiment with a tweet or two, or will they introduce far greater controls to protect investors?