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Pomerantz Law Firm Announces the Filing of a Class Action on Behalf of Investors of GameStop Corp. Securities GME
Globe Newswire 30-Jun-2024 9:04 AM
NEW YORK, June 30, 2024 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed on behalf of investors of GameStop Corp. ("GameStop" or the "Company") (NYSE:GME) securities. The class action, filed in the United States District Court for the Eastern District of New York, and docketed under 24-cv-04608, is on behalf of a class consisting of all persons and entities other than Defendant that purchased or otherwise acquired GameStop securities between May 13, 2024 and June 13, 2024, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendant's violations of the federal securities laws and to pursue remedies under Sections 9(a), 9(f), 10(b), and 20A of the Securities Exchange Act of 1934 (the "Exchange Act"), and Rule 10b-5(a) & (c) promulgated thereunder, against Defendant.
If you are a shareholder who purchased or otherwise acquired GameStop securities during the Class Period, you have until August 27, 2024 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
GameStop is a specialty retailer that provides games and entertainment products through its stores and ecommerce platforms in the U.S., Canada, Australia, and Europe. GameStop's principal executive offices are located at 625 Westport Parkway, Grapevine, Texas 76051. The Company's Class A common stock trades in an efficient market on the New York Stock Exchange under the ticker symbol "GME."
Defendant Keith Patrick Gill, known as "Roaring Kitty" on YouTube and the social media platform X (f/k/a Twitter), as well as "DeepF***ingValue" ("DFV") on the social media platform Reddit, is an American financial analyst and investor, as well as former financial analyst for Massachusetts Mutual Life Insurance Company, also referred to as "MassMutual." Defendant is also a former registered stockbroker who holds several securities-industry licenses, as well as one of GameStop's largest shareholders. As of June 2024, Defendant had over 1.6 million followers on X, 982,000 subscribers on YouTube, 116,000 members on his personal subreddit "r/roaringkitty" (ranked "Top 2%" in size among top Reddit communities), and 200,000 members on his personal subreddit "r/DeepF***ingValue."
Defendant was a key figure in the so-called "meme stock" movement, which saw shares of GameStop and a handful of other companies surge as much as twenty-one-fold over two weeks in January 2021 before crashing to pre-surge levels in the subsequent days. Meme stocks are stocks that gained viral popularity on discussion threads on social media platforms like Reddit and X, where online communities of retail investors dedicated their attention to particular stocks, sometimes for purposes of initiating a squeeze on short investors and hedge funds, and other times based on genuine beliefs about a company's prospects.
Defendant's ability to rally a massive following of retail investors to purchase and hold GameStop securities through his social media posts is well-documented. In 2021, after the meme stock movement sparked chaos in the financial markets as major hedge funds and others lost billions of dollars in short-squeeze events, Defendant testified before the U.S. House Committee on Financial Services about the meme stock movement as the perceived champion and face of that movement for GameStop investors. In fact, Defendant is largely credited as sparking the meme stock movement and, in 2023, a biographical film called Dumb Money was released chronicling these events and Defendant's subsequent rise to celebrity status.
Defendant's last post on Reddit in 2021 showed that his GameStop positions were worth approximately $30 million. Defendant made his fortune as an investor largely, if not entirely, as a result of his participation in the 2021 meme stock movement.
On May 12, 2024, for the first time in nearly three years, Defendant made a post on the social media platform X, which took the form of a meme showing a "gamer"—that is, an individual that plays video games—in a suit, leaning forward in his chair in seeming concentration and/or attention. As reported by multiple news outlets, this meme was widely understood by Defendant's followers, analysts, and others to mean that Defendant was watching and/or following GameStop's performance. Over the next few days, Defendant posted a series of subsequent memes on X—largely taking the form of video clips with a battle or fight theme from popular movies and television shows, overlaid with text or other graphics—that were similarly understood to generally reflect Defendant's renewed interest in GameStop.
As the market reacted to Defendant's posts, GameStop's stock price surged, rising by $12.99 per share, or over 74%, to close at $30.45 per share on May 13, 2024—the first trading day following Defendant's post on X. GameStop's stock price continued to climb the following trading day, closing at $48.75 per share, an increase of over 179% from the stock's closing price of $17.46 per share on May 10, 2024—the last trading day before Defendant's post on X—only to normalize again and close as low as $18.32 per share by May 23, 2024.
On Sunday, June 2, 2024, to pump the prices of GameStop's securities back up, Defendant revealed his large stake in the Company via a post on Reddit, causing GameStop shares to soar more than 70% in early premarket trading on June 3, 2024. In particular, Defendant posted a screenshot of his GameStop portfolio on Reddit through his DFV account, revealing that he owned 5 million shares of GameStop stock and 120,000 GameStop call options with a strike price of $20, which were set to expire on June 21, 2024. Significantly, this post did not reveal when Defendant had purchased these securities.
On June 3, 2024, GameStop's stock price ultimately closed at $28.00 per share—21% higher than the prior trading day's closing price of $23.14 per share on May 31, 2024.
On June 3, 2024, shortly before markets closed, the Wall Street Journal ("WSJ") published an article revealing that Defendant had purchased "a large volume of GameStop options on E*Trade" shortly before his May 12, 2024 post on X that sent GameStop securities soaring. The WSJ reported that "E*Trade is considering telling Defendant that he can no longer use its platform after growing concerned about potential stock manipulation around his recent purchases of GameStop options, according to people familiar with the matter." The article reported that "[s]hortly before [Defendant] reignited a meme-stock craze in May, he bought a large volume of GameStop options on E*Trade," and that "[t]his week, Gill posted screenshots of an E*Trade account showing he owns GameStop shares now valued at $140 million and a new set of options that expire later this month. His total gains on the positions were at $85.5 million, he posted late [on June 3], showing his account remained in operation." The WSJ article stated that "E*Trade and its owner Morgan Stanley" had "concerns [Defendant] can pump up a stock for his own benefit" and are "debat[ing] whether his actions amounted to manipulation[.]" Finally, the article reported that "the Massachusetts securities division is looking into [Defendant]'s activities" and that "[t]he [SEC] has also been reviewing trading in GameStop call options around the time of [Defendant]'s social media posts[.]"
On this news, GameStop's stock price fell $1.50 per share, or 5.36%, to close at $26.50 per share on June 4, 2024.
Then, on June 13, 2024, during after-market hours, Defendant posted another screenshot of his GameStop portfolio on Reddit through his DFV account, showing that his portfolio no longer included the 120,000 GameStop call options set to expire on June 21, 2024, and that his position in GameStop stock had increased from 5 million shares to over 9 million shares, making him one of the Company's largest shareholders. Defendant profited handsomely from these transactions. In particular, before his May 12, 2024 post on X that reignited the meme stock movement, GameStop call options were generally trading at less than $3.00 per option contract. After his May 12, 2024 post on X and during the Class Period, the value of these options rose dramatically to an average of $10.16 per option contract, peaking at a closing price of $31.00 per option contract on May 14, 2024 during the Class Period. These same options traded at around $5.00 per option contract as of their June 21, 2024 expiration date.
Following news that Defendant had sold and/or exercised these GameStop call options, GameStop's stock price fell $4.42 per share, or 15.18%, over three consecutive trading sessions, to close at $24.70 per share on June 18, 2024.
The complaint alleges that Defendant engaged in a pump-and-dump scheme, whereby he: (i) shortly before his May 12, 2024 social media post on X, and unknown to investors, quietly purchased a large volume of GameStop call options on E*Trade at comparatively low prices; (ii) on May 12, 2024, reignited the meme stock movement and pumped the value of GameStop securities with his first social media post on X in nearly three years; (iii) after the prices of GameStop securities had abated, pumped the value of GameStop securities again via a June 2, 2024 post of his GameStop portfolio on Reddit, disclosing his large position in GameStop securities, including 120,000 GameStop call options and 5 million shares of GameStop stock; and (iv) by June 13, 2024, quietly sold and/or exercised (i.e., dumped) all 120,000 of his GameStop call options for a large profit, seemingly to increase his own stake in GameStop stock by over 4 million shares, belatedly revealing as much to investors on June 13, 2024, during after-market hours.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
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