Roaring Kitty, the influencer known for GameStop’s 2021 rally, has now made a substantial move by acquiring 9 million shares of Chewy Inc. This development comes while he faces legal trouble over alleged manipulation of GameStop’s stock price.
Significant Stake in Chewy Inc.
In a recent disclosure to the U.S. Securities and Exchange Commission, Keith Gill, also known as “Roaring Kitty,” revealed his new investment in Chewy Inc. (CHWY). Gill acquired a 6.6% stake in the pet products retailer, which led to a 22% surge in Chewy’s shares during premarket trading.
Roaring Kitty Acquires CHWY Stock
According to the SEC filing, Roaring Kitty purchased 9.01 million CHWY shares worth $245.18 million. This acquisition makes him one of the largest shareholders in Chewy. A cryptic image of a dog posted on his social media hinted at this investment strategy. Consequently, Chewy’s stock reached its highest levels in nearly a year, soaring 21.92% to $33.21 in pre-market trading on July 1.
Impact on GameStop and Legal Challenges
While Chewy’s shares surged, GameStop (GME) experienced a 5% decline in pre-market trading. Alongside his new investment success, Gill is facing legal issues related to his previous activities with GameStop. A class-action lawsuit filed on June 28 accuses Gill of securities fraud, alleging a “pump and dump” scheme around GameStop stock.
Former prosecutor Eric Rosen commented on the lawsuit, expressing skepticism about its success. Proving the allegations may be challenging, despite significant fluctuations in GameStop’s stock price attributed to Gill’s online activity between May and June.
Allegations of Securities Fraud
The lawsuit claims Gill did not effectively disclose his GameStop transactions, misleading his followers and causing financial losses for some investors. Plaintiff Martin Radev, represented by the Pomerantz law firm, stated he suffered losses due to the alleged scheme. He bought 25 GameStop shares and three call options in mid-May, which significantly dropped in value.
GameStop Stock Decline
GameStop’s stock has continued to plummet. At press time, its price fell 6.89% to $22.99 in Monday’s pre-market session, after closing at $24.69 on June 28, marking a 1.59% drop.
Conclusion
Roaring Kitty’s major investment in Chewy Inc. has significantly impacted the market, causing a notable rise in Chewy’s stock. However, his legal challenges related to GameStop remain unresolved, casting a shadow over his investment strategies.
