Since the beginning of the year, no story has managed to cause a stir quite like that of Gamestop’s (GME) abrupt rise in share value. The story has many players and many angles, with the ultimate conclusion still to come. One of the most prominent faces of this situation is Keith Gill, also known as TheRoaringKitty on social media. Gill currently has a portfolio worth nearly $40 million, including soon-expiring call options on GME stock.
The face of the overlooked retail investor
Keith Gill ended up becoming the unexpected face of the retail investor meme stock movement that has been at odds with hedge fund managers over GME stock. In Reddit’s WallStreetBets community forum, Gill goes buy the username u/DeepFuckingValue. The semi-regular YOLO screenshots of his GME-relevant portfolio have been an inspiration to thousands of amateur investors who see themselves as David to Big Finance’s Goliath.
$50,000 worth of GME shares were acquired by Gill last year. By the end of December, his portfolio value had already skyrocketed to over $3 million. In February, during the most intense of the mainstream media attention on the stock, Gill testified in front of congress.
In response to accusations that he had intentionally attempted to defraud potential investors with his social media posts and videos, Gill said, “The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is preposterous. My posts did not cause the movement of billions of dollars into GameStop shares.”
"GameStop's stock price may have gotten a bit ahead of itself last month, but I'm as bullish as I've ever been on a potential turnaround," he said. "In short, I like the stock." He purchased 50,000 additional shares of GME in the days following his appearance in front of congress.
Part of the estimated $40 million worth of Gill’s portfolio comes in the form of call options set to expire on April 16, 2021. These derivatives, or contracts, offer Gill the right to purchase 50,000 shares of GME at only $12 a share. There are a few options available for taking advantage of this.
The contract itself has value and can be sold prior to expiration. It is currently valued in the neighborhood of $9 million. Gill could realize a large windfall from his early bet with no further capital investment. He also has the option of buying the additional shares as per call option stipulations. Should the option be exercised, Gill would pay around $600,000 to acquire the new 50,000 shares. Gill currently has a cash position of $11.8 million, making that exercising of his call options position less of an issue. Should the stock price continue to rise, the potential windfall could be monstrous.
There are no guarantees that GME will go back over $200 a share, though. Gill could also choose to sell a fraction of the expiring call option position held on GME and use the proceeds to cover the costs of exercising the remainder.
If past comments and actions are considered, it would not be surprising to see Gill exercise the full option and continue to hold with his diamond-handed bullish optimism for the stock. With Gamestop naming former Chewy CEO Ryan Cohen as chairman this June, some investors feel the company could actually turn around what had once been a sinking ship that the finance industry had all but left for dead.
Whatever decision Gill makes is likely to be well-received by r/WallStreetBets and his social media following, but the potential windfall of nearly $9 million is enough to keep up anyone at night.