GameStop stock skyrockets as user DeepF***ingValue reveals massive $175 million position on Reddit – Analysts issue warning!

New York, NY – GameStop (GME) stock witnessed a significant surge on Monday following a Reddit post by user "DeepF***ingValue," believed to be linked to individual investor Keith Gill. The post revealed a screenshot indicating an investment of nearly $175 million in the video game retailer. Known as Roaring Kitty on YouTube and X, Gill posted the screenshot on Reddit’s Superstonk subreddit. GameStop saw a rise of up to 75% at the market open, doubling at one point during premarket trading, and by 3 p.m. ET, the stock was up around 30%.

The screenshot displayed holdings of 5 million GameStop shares purchased at an average price of $21.274, valued at $115.7 million based on Friday’s closing price of $23.14. GameStop shares were trading at $38 each in early trading on Monday before being temporarily halted due to volatility. Additionally, the account appeared to own 120,000 options contracts expiring on June 21, allowing the purchase of GameStop shares at $20 each, totaling $65.7 million as of Friday’s close.

Interactive Brokers chief strategist Steve Sosnick cautioned investors against chasing the rally, questioning the motivations behind the account’s actions. He advised investors to consider whether the interests being served were their own or the account controller’s. Sosnick warned against being drawn into buying at inflated prices, potentially providing liquidity for the account to sell into.

The surge in GameStop’s stock followed a similar rally in mid-May when "Roaring Kitty" made his first post on X in years. Despite these recent upticks, analysts suggested that the level of retail engagement was not on par with 2021 levels, indicating a more transient trend. Despite warnings, GameStop took advantage of the May rally by selling 45 million shares, generating $930 million, and resulting in a 25% surge in the stock price.

Contrary to typical expectations, the stock price of a company issuing new shares, such as GameStop and AMC (AMC), which raised $250 million through the sale of 72.5 million shares last month, did not decline after the stock sales. AMC shares were also up approximately 13% on Monday. The article was contributed by Ines Ferre, a senior business reporter for Yahoo Finance, offering insights and updates on the latest market trends and financial news. Follow her on X at @ines_ferre for more updates and analysis on financial markets and business news.