Roaring Kitty’s return to GameStop is playing out like an uninspired Hollywood sequel with no real villain and a missing hero

When Keith Gill, aka Roaring Kitty, burst onto the GameStop scene more than three years ago to lead an army of Reddit users against Wall Street hedge fund billionaires, the villain’s fascinating story left audiences wanting more a lot.

Eight months after his story was immortalized on the silver screen, his unexpected return now threatens to play out like a bad Hollywood sequel – relying on nostalgia while lacking the drama and heroism of the original the second time around. Worse, there’s no real villain to fill the shoes of Citadel’s Ken Griffin – and now the main protagonist is gone.

Without a narrative compelling enough to go viral, the chances that Gill can marshal his scattered forces and send GameStop stock to the moon again seem slim to none.

“I don’t know what the new story is for this company that would in any way justify the $9 billion valuation,” argues Derek Horstmeyer, a finance professor at George Mason University’s School of Business in Virginia. “And Gill didn’t seem to be able to articulate what that would be.”

Since euphoria over Roaring Kitty’s re-emergence drove the stock to $48 earlier this month, it has given up nearly all of its gains. It’s now trading around $25, just above its close of $23.14 before Gill first disclosed on June 2 that he owned 5 million shares.

Roaring Kitty, a creature of the blockade era

At the time GameStop first became a viral phenomenon, the 38-year-old portrayed it as nothing more than a YOLO trade — a “get it big or die trying” kind of mentality that analyst and podcaster Demetri Kofinas has called ” financial”. nihilism”.

Gill even claimed that his investment decisions may lack any rhyme or reason and simply result from pulling random cards from an Uno deck he keeps handy while consulting the Magic Eight Ball.

In that sense, Roaring Kitty was truly a creature of the zeitgeist. At the time, asset prices across the board had been artificially inflated by a mix of zero interest rates and quantitative easing by the Federal Reserve. Pandemic-era stimulus checks put found money in the pockets of ordinary Americans at a time when sports gambling was impossible after COVID eliminated spectator events.

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Many found that they could find all kinds of long-shot bets that offered a big profit for relatively little money in the options market, which enjoyed a decisive advantage over betting on ponies or a heavyweight title fight.

“In sports betting, the more people pile in, the more the odds begin to even out without any effect on the likelihood of the outcome,” said Steve Sosnick, chief strategist at Interactive Brokers. wealth. But, “if enough speculators buy a particular option at the same time, the more likely it is to pay off.”

Stranded at home and searching the online community, a number of small shareholders discovered that wealthy hedge funds like Steve Cohen’s Point72 were all too short GameStop. If Gill and his allies were to get together and buy short-dated call options from Citadel, it would leave top market maker Ken Griffin and others like him scrambling to secure the underlying stock. in order to cover their exposure. The Cohens and Griffins of the world would bump into each other bidding for the stock regardless of price.

The timing was also ripe for a GameStop release, as the retailer expected to benefit from a lockdown-induced boom in video games coupled with the launch of a new generation of Sony PlayStation and Microsoft Xbox consoles.

Along with other social media users in the WallStreetBets subdivision, Gill helped catapult the stock to a split-adjusted intraday record of $120.75 in January 2021. The brief squeeze saw its market value rise to $50 billion was so epic that it caught the attention of the White House. A month later Congress held a hearing on it with Gill testifying.

The meme stock craze gives way to a return to normality

Four years later, the story is completely different. The pandemic is over, people are gradually returning to the office, and policy tightening by an inflation-fighting Fed means savers are no longer penalized for taking their money out of money market accounts.

The gaming industry is in full-blown crisis with Sony, the dominant console maker, admitting that sales of its PS5 have peaked. Game publishers are also shuttering successful studios and moving away from physical discs that cost money to produce and distribute in favor of remote downloads that leave GameStop with an embarrassing business model for the future.

The shared sense of community among other “monkeys,” a self-deprecating term used by meme stock marketers, is no longer as powerful. All that’s left is residual anger at a system rigged against them.

Whether it was Nancy Pelosi’s mysterious stock-picking luck that prompted calls to ban members of Congress from trading, the SEC granted Warren Buffett an exemption from disclosing his nearly $7 billion investment in a rival, or hedge funds simply by being invited by the media to talk about their book all the time, it often feels like the elites can get away with anything.

But it’s hard to crystallize the kind of support needed for a rally against passers-by not directly involved in GameStop. Neither Pelosi nor Buffett make convincing enough substitutes for billionaires like Cohen and Griffin, who many believe pulled the strings to cause stock trading app Robinhood to halt activity when the market moved against them. (Citadel argues that the collusion allegations were dismissed in their entirety, and a US district judge dismissed a class-action lawsuit citing a lack of evidence).

“Ken Griffin made for a really great villain. The GameStop dealers really wanted to stick it to Citadel,” says Horstmeyer.

The vitriol was so intense that Steve Cohen left Twitter over threats he claimed were made against his family. This time there is no precious scalp worth claiming, and the latent anti-establishment sentiment is much more amorphous. “There is no concrete face to it,” adds Horstmeyer.

What is his strategy?

If Gill had any ideas about how GameStop should be reorganized, he hasn’t voiced them since his return. He communicates primarily through guerrilla-style memes (simply posting a cartoon dog on social media sent shares in pet supply retailer Chewy soaring on Thursday).

The one time he spoke to his fans, he hosted an hour-long live stream on YouTube where he simply aimed to “reiterate a lot of my previously held views” rather than update his thesis in light of recent events. .

For now, Gill is keeping everyone guessing about his ultimate intentions. At one point he teased viewers in his only live stream by pulling out his trusty old Magic Eight Ball to ask what the plan is for GameStop – only to have it shelved before the round plastic oracle to be able to answer.

“Either he really believes in this company, or he’s completely nihilistic and just wants to be internet famous,” Horstmeyer continued. “It’s a toss-up at this point.”

There’s a potential new twist in the story that no one saw coming: As the company’s second-largest individual shareholder, Gill could claim a seat on the board. He seemed to send a cryptic message by raising his holdings to the same number that chairman and CEO Ryan Cohen had when he made a show.

Gill’s latest post on E*Trade showed that he’s made $50 million, but that’s a pittance since he briefly became a billionaire just hours before he turned 38 this month. Still—unless he’s gambling it all away—he seems set for life even with ‘only’ $270 million in his E*Trade account. Can Gill, who spent most of the 2010s between jobs, credibly embody the same undercurrent in GameStop’s ‘us vs. them’ narrative?

“My question is, who are ‘they’ now?” asks Sosnick. “If you’re not sure who ‘they’ are, ‘they’ are probably you.”

Meanwhile, the protagonist himself seems to have disappeared in his narrative. WallStreetBets, the social media account that pioneered the concept of meme stocks, YOLO trades and loss porn, looked like a crazy lover last week. After preaching to her followers that GameStop’s ‘mother of all short squeezes’ was coming any day now, WallStreetBets returned to tweeting obsessively about Gill.

“Waiting for Roaring Kitty to post a screenshot of the GameStop PnL, IT posted last Thursday, using the sad Pablo Escobar meme by Narcos. 24 hours later she followed up with another call: “We need Roaring Kitty to give us a sign now.” On Monday she begged Gill to “take out a loud tweet” before finally complaining that a fortnight had passed without a word from the totemic leader.

GameStop has more money than it knows what to do with

Right now, the only one standing pretty is GameStop itself. Taking advantage of the sudden renewed interest in Roaring Kitty, he flooded the market with 120 million new shares issued, undercutting everyone including CEO Ryan Cohen, its largest shareholder. Thanks to the two issuances, cash on hand quadrupled while its balance sheet doubled in size over the span of four short weeks.

The company filled its coffers so full that Andrew Left of Citron Research raised the white flag and walked away from his lot. He argued that the company is still a basket case, but it can survive alone on the back of its cash pile even if its core business implodes. “With $4 billion in the bank, they have enough runway to appease their cult-like shareholders,” Left’s firm said.

GameStop can now turn a profit simply by investing in ultra-safe US Treasuries instead of selling actual video games, making it the equivalent of a Ryan Cohen family office to a captive brick-and-mortar retail business .

Even the company doesn’t seem to have plans for what to do with all the money now in its bank account. The annual shareholder meeting lasted only half an hour and no questions were asked from investors.

Unless something unexpected happens that can capture people’s imaginations and spur support, social media won’t prove as effective at rallying enough troops to sustain a run on GameStop stock this time around.

“It’s like a sequel without the plot,” Sosnick says.

With Gill seemingly on the sidelines for now, perhaps he can borrow his trusty Cohen Magic Eight Ball.

This story originally appeared on Fortune.com