GameStop shares dipped by 7% in pre-market trading following the revelation by Keith Gill, also known as “Roaring Kitty,” of a 6.6% stake in Chewy. This news comes as Gill faces a new lawsuit alleging manipulation of GameStop’s stock. Benzinga's Premarket Prep team discuss.
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00:00start with this morning. Last week, you had Roaring Kitty. I'll pull up the tweet.
00:04In classic Roaring Kitty fashion, tweeted this meme in a cryptic way. People didn't
00:09know exactly what it meant. You had these memes of different pets and animals. This caused a lot
00:15of speculation. People are wondering, is this about Chewy stock? Is this about Woof? Is this
00:20about this or that? Well, it came out this morning, confirmed that Gil did take a stake in Chewy,
00:26worth over $245 million, 6.6% of the company, 9 million shares.
00:35Just on this news alone, you had Chewy rising last week, again, on the speculation. People
00:40didn't know for sure. Now we know for sure. Of course, there is that connection with Ryan
00:45Cohen and GameStop and Chewy here. This is the first time we've really seen Roaring Kitty go
00:54deep into a stock that's not GameStop. You're seeing the effects of that this morning.
00:59We talked about this. Obviously, the speculation last week was it was Chewy. We talked about it
01:06probably being Chewy because of the Ryan Cohen connection, GameStop, Chewy. Then it sold off.
01:12We talked about this last week too. At least, I was talking about it. I wouldn't want to be
01:17short this. I said this on Friday. I would not want to be short this stock because it's come
01:22all the way back down. Do you think he's one and done? Do you think he's just posting a picture of
01:26a dog and that's it? Obviously, not the case. Now, you see his position. He has an official filing
01:31here. The stock has a rip, roar, and rally. Now, is this over? Is this it? Does it come right back
01:37down? I don't know. The fade trade's been working on these things. Obviously, GameStop's come all
01:42the way back down to basically, or a long ways back down. There's lots of thoughts here. One,
01:48the filing, if you go into the actual filing, that's the name of the show here today.
01:52It actually says on the second line in the SEC filing. He's obviously, there's a place we can
01:58add more information. He's obviously added more information. It says, check the appropriate box
02:03to designate whether you are a cat. I am a cat. I am not a cat. He checked. I am not a cat.
02:10This is obviously trying to make a bit of a mockery of even the SEC forums here. It's
02:16interesting mocking to a certain extent, but it's on official SEC forum is funny. I don't know if
02:22regulators are going to find it funny. With that being said, I mean, I guess he's disclosing more
02:28information. He's not a cat. This is just the whole thing. Then earlier in the weekend, it was,
02:35I think, Sunday that came out. There's a class action lawsuit against Keith Gill here now,
02:42where they're basically saying his client had bought the stock at elevated prices and basically
02:49calling all these memes a pump and dump. It was 30 pages. I leafed through it pretty quickly.
02:55I don't know if he's got a case here or not, because again, you're just posting memes.
02:59He's not telling anybody to buy it up there. There's a class action suit against him now.
03:05There's a lot of interesting things happening in Roaring Kitty's life.
03:10All right. Now, 35 and a quarter stands as the pre-market high. Now, the fact that you've leaked
03:17$5 from that area, whether it's Chewy, GameStop, Roaring Kitty, Microsoft, whatever stock,
03:25the technicals don't favor a rally, right? Unless the army reappears here, but that'd be a nice
03:33target, 35 and a quarter, five bucks away, get to do some heavy lifting to get back up to that
03:38area. If you're looking for support today, and even though it's wild and all the news you get
03:44on this stock, even like GameStop, it comes back, it fills the gap. Technicals still can play a role
03:52in this, but if you're looking for support, it would be at the top of Friday's range in Chewy,
03:58and that comes in at 28.16. They're your early parameters in Chewy.
04:04And because it's such a large position, what did you say the dollar amount here is,
04:08AB? $245 million. That was based on Friday's close. Another 20% of that,
04:18add another 50 million there, you're looking at around 300 million. I don't know. Again,
04:22I guess you can't probably sell that quickly if you're Mr. Gill, but at some point here,
04:29if you're up $50 million on a trade, it's probably smart to take some profits.
04:35Hard to say if he's buying or selling, but what obviously, if we go to the GameStop action here
04:41this morning, people are speculating here that he has sold some GameStop. They're speculating,
04:46we don't know this, but speculating that he sold GameStop because it's such a large amount of money
04:51going to Chewy that they're trying to add up the math and saying, well, if he's taking a $260
04:55million position here in Chewy, then maybe he sold some GameStop to finance that. I don't
05:02know if that's the case or not. I'm not Keith Gill. I haven't seen a GameStop. There's no
05:06filings out here for this stock to know whether he's sold or not. So we have no information on
05:11that, but they are selling GameStop hard here this morning. It is now trading down 7% here
05:17as it appears Keith Gill's focus is now going to be on Chewy and not GameStop. Amazing what I've
05:24already said is this person right now is the most influential person on Wall Street, more influential
05:30than Warren Buffett. So it's not always going to be that way, but at this moment in time,
05:35the day we're doing this show here right now, Keith Gill is the most influential person on
05:39Wall Street. That's impressive for him and himself. I mean, but with that influence,
05:44there's obviously going to be some regulators looking and saying, hey, is he doing this to
05:50personal gain? Why is he doing this stuff? I think regulators will be taking a look. I don't think
05:56that there's a really, I've said before, I don't think there's a main big case against him here
06:00because it's one, freedom of speech. Two, he's disclosing his positions. I mean, if we just look
06:05at the Chewy case, he posted a meme of a dog and he disclosed his position. I'm like, I don't see
06:11anything wrong with that. Obviously, if you're going to charge him, where do you stop then? One,
06:19you want people to disclose your position. So I mean, he had to file. So he filed. So I don't
06:24see anything wrong with that. And he posted a picture of a dog. I don't really see anything
06:28wrong with that either. So I mean, maybe the intent here is to manipulate the price higher,
06:32but you got to prove that intent. I don't know, posting a picture of a dog, you didn't tell me,
06:37but even the class action suit, I mean, tell these people to go and buy the stock up there.
06:41They pull the trigger.
06:45No, I don't think there's a case against him on this, which I don't know how you, obviously,
06:50maybe some intent is there if you're just using common sense. But with that being said, I think
06:56he's, I don't think he's, I don't think the class action suit is going to win. And I don't know if
07:01regulators can charge him. It's such an interesting situation. There's going to be a winner in that
07:07class action lawsuit, for sure. Who's the winner going to be? The lawyers?
07:12Yeah, the lawyers. Yeah.
07:14Yeah. I mean, you look at, I mean, there's a lot of investors on Wall Street that talk about why
07:18they're making an investment, why they like a certain stock. And so that's something you're
07:22allowed to do. I'm curious, because going back to Roy and Kitty's initial GameStop position before
07:28it blew up, I mean, he had a real thesis. He had this idea about the underlying value of GameStop
07:34and the fact that it was undervalued in the market. And I wonder if he has a similar thesis
07:39for Chewy or if he's just buying it because he likes the stock and likes Ryan Cohen and knows
07:43that he can move it up. Because that might change something a little bit as if he has basically no
07:48investment thesis versus a legitimate one with GameStop. As far as the class action goes, I mean,
07:53I feel like that opens the door. I mean, what about all the people that bought Bitcoin at the top or
07:59Tesla at the top because of Elon? I think that opens the door.
08:02One person on Twitter was promoting Bitcoin or saying, you know, Bitcoin to the moon,
08:06you know, to that person. Where's freedom of speech stop? And where is, you know, manipulative
08:11intent? I mean, everybody wants their stocks to go higher. People talk on Twitter, they talk their
08:16book, basically stocks on Twitter. It's just constant talking book. Everybody's just talking
08:21their book. So, I mean, I don't know how, where you stop and where it becomes manipulative. Like,
08:28maybe when you're front load nine million shares, maybe it's a size thing. Like you're going to go
08:33and load up two hundred and fifty million dollars worth of stock and then promote it. But he never
08:38even said buy it or anything. I mean, it's such a such a weird scenario for regulators to try to,
08:45like, you know, grasp around it. I just don't know if I was a regular. I don't even know, like,
08:50how you go about it in the class action suit. I don't under I believe through it. It's about
08:54a bunch of memes. I mean, they're just accusing them of posting memes. I'm like, I didn't know
09:00that was illegal, but OK. We talk about opinions, people's opinions, Wall Street. Everybody has
09:06opinions. Yeah. What Warren Buffett's opinion? I mean, you know, do people when Elliot or Tepper,
09:16these guys come out? I mean, he's definitely exploiting, you know, things that go on in
09:22Wall Street and it's been going on for a long time. He's just doing it on a much different
09:28basis. I mean, that's it. I mean, that's it is. He'll continue to do it. I don't think there's
09:35a lawyer. If I was a lawyer, I wouldn't accept a case like that. The other thing, too, is like,
09:40you know, it had the big pop when he posted the dog that was back on last week, but then it came
09:47all the way in. Maybe he bought it. You know, maybe he bought it on the dip, maybe not on the
09:54rip. So maybe. Yeah. You don't have to know, but I'm sure it's caught attention. The right. The
10:00only thing I would say that, you know, to me, I wish it was another stock besides Chewy,
10:06you know, because, you know, with Ryan. Yeah. That's the only thing that's like, come on,
10:10man. You know, like like is he friends with Ryan Cohen? You know, is there like a text to Ryan
10:17Cohen? Because that's where we get shady. He's like if he's got like text messages going with
10:22Ryan Cohen, that's where regulators would start to be like, oh, maybe we have something here.
10:26As long as there's no communication, though, because Ryan Cohen, obviously an insider,
10:30you know, on obviously GameStop, as long as there's no like communication, I think I think
10:35he's OK. But we don't know what he's doing personally behind the scenes. It's just very
10:39interesting. It's all very interesting. One person was to say in the chat, and they're absolutely
10:43right. These have been fantastic selling opportunities, though. So when these stocks
10:47have these meme pops, you know, like Chewy last week popping up to thirty nine dollars, give
10:52Kramer some credit here, because Kramer actually was doing fundamental analysis on Chewy and he
10:58actually recommended the stock. And I said Kramer's been hot lately, you know, on like
11:03Tuesday. And then the whole thing happened on Thursday and Kramer tweet out sell half of it
11:07right now. And I mean that it's rarely that Kramer just comes in and just says sell just
11:13like that, you know, like right after he just said buy it two days ago. But you know what?
11:18I mean, I think it's the call when you get these 10, 20 percent pops, 30, 20, over 20 percent pops
11:24in these stocks off these memes. It's just a fantastic selling opportunity. So I'm definitely
11:30not chasing these things. But, you know, like to yesterday, to Friday's point, when I was saying
11:35I wouldn't want to be short Chewy at twenty seven. Well, I had popped thirty one, thirty two. Maybe
11:39your story changes a bit because now the price is artificially inflated. I mean, it isn't company
11:44fundamentals driving Chewy higher. It's simple fact that somebody posted a meme and a very
11:49influential person bought a position here. So I think the story, you know, just changes as you
11:54get these 15 to 20 percent pops. Maybe they are good selling opportunities.