Chewy, the online pet food retailer, saw a surge in its stock price on Monday after investor Keith Gill, also known as “Roaring Kitty,” disclosed that he had purchased 9 million shares in the company. This significant position was revealed in an SEC filing on July 1, indicating that Gill now holds approximately 6.6 percent of Chewy’s shares.
Although the purchase price was not specified in the filing, the stake is valued at around $248 million based on Chewy’s stock price of $27.50. The stock had been trading between $26 and $30 per share the previous week, with a notable spike to the mid-$30s around the time Gill posted a cartoon image of a dog on his X account.
Gill gained prominence as a key figure in the social media frenzy that drove GameStop’s stock price to unprecedented levels in late 2020 and early 2023.
Roaring Kitty adds another meme stock to his portfolio
This latest investment in Chewy follows Gill’s recent acquisition of shares in GameStop, a meme stock that garnered significant attention from traders on social media platforms. Gill had previously disclosed a substantial position in stock and options of the video game retailer, leading to a surge in its stock price. GameStop took advantage of the increased valuation to issue new shares.
Both Chewy and GameStop have ties to executive Ryan Cohen, who founded the pet company and assumed the role of GameStop CEO in September 2023.
It remains unclear whether Gill’s new stake in Chewy is in addition to his previously disclosed investment in GameStop, which was valued at over $180 million when he first announced it in early June. Following the confirmation of his ownership, GameStop’s stock price experienced rapid appreciation.
However, with GameStop’s price declining from its peak above $45 in recent weeks, it now hovers around Gill’s estimated breakeven point of $23.
Gill has not publicly shared his investment thesis for Chewy as he did for GameStop during a YouTube livestream in June. In that livestream, Gill expressed confidence in the company due to Cohen’s leadership and anticipated a turnaround under his guidance.
‘Roaring Kitty’ diversifies with Chewy stock
The volatility of GameStop’s stock serves as a cautionary tale for investors considering meme stocks, highlighting both the allure and risks associated with these speculative investments.
Meme stocks, fueled by social media hype, attract traders seeking quick profits but also expose them to significant market fluctuations. Skilled traders can capitalize on price surges, but the inherent unpredictability can lead to substantial losses for those unprepared for the downside.
While some may profit from the frenzy surrounding meme stocks, others may find themselves on the losing end of the trade. Given the competitive nature of the market, individual investors may struggle to consistently outperform passive long-term strategies.
Editorial Disclaimer: Investors are encouraged to conduct thorough research on investment opportunities before making decisions. Past performance is not indicative of future results.