BROCKTON, Mass. — Keith Gill posted his first YouTube video with the username “Roaring Kitty” in July, not knowing how his streams about investment research and stock trading would go.
Within two weeks, the Brockton native was making videos about video game retailer GameStop and was starting to form a position that its shares would rise.
By the end of the year, more people had joined his streams and tuned into updates he shared in a Reddit forum about his GME investments. And a coordinated effort by forum members to buy the company’s stock caused its price to shoot up at the peril of big investors who were betting it wouldn’t.
“I don’t know what I was doing and I still don’t, but hopefully I can figure it out,” Gill said in a video posted on Christmas.
Gill, who made an initial investment of $53,000, has seen his stock value grow to the millions from the shares’ increases.
Circumstances that led Gill to success and to rally newer, smaller investors to join in could be attributed to his financial skills, vision and an ability to communicate, said Boston University finance professor Fernando Zapatero.
But it also took luck. For others out there, factors didn’t align in the same way as they did for Gill, Zapatero said. He caught the company at its lowest price and saw that people were shorting its stock.
“He was at the right place at the right time,” Zapatero said. “There is no question that he is a talented guy.”
Gill, who is now a Wilmington resident, did not immediately respond to a request for comment. He has only granted one interview, to the Wall Street Journal, since the stocks soared.
GameStop has been around for years, but like other retailers, it was struggling before COVID-19 because of changing conditions like a rise in online shopping, Zapatero said. The pandemic contributed to the company’s struggles, due to restrictions on indoor shopping.
The pandemic changed other aspects of life, including people staying at home. Some began to invest using platforms such as the phone app Robinhood, which has added millions of accounts since the pandemic began, Zapatero said.
“People were short of entertainment opportunities…They discovered investing is fun and can be fun and risky,” he said, adding that the possibility of making money was another motivator for some.
Gill posted his first video analysis about GameStop in August.
He described the company’s stock more as a roach than a cigar butt because there are opportunities for GameStop to reinvent itself and live on.
Gill also laid out other reasons why investment would be good, including signs that people are still interested in buying game consoles and games and that video game spending has been doing well during the pandemic.
“I think everyone else is crazy and I think I’m right, but I’ve been wrong plenty of times in the past,” he said on one of his videos, inviting people to weigh in on his hypothesis.
Individuals, including him, saw through publicly available information that GameStop was the most shorted stock. Large hedge funds have borrowed shares for the company, waited for its prices to drop, bought them back at a cheaper price and then returned the stocks to make a profit.
Members of the Reddit forum Wallstreetbets banded together to buy GameStop stock, whose ticker symbol is GME, and drive the prices up, causing the short sellers to buy back shares and return them with a loss.
Zapatero, the BU professor, said the frenzy was the result of a “loop,” with people buying stock and driving the price up and then short sellers buying it back and putting pressure on other short sellers, which in turn, caused the price to increase still more.
This is referred to as a short squeeze.
“Shorting is not something you can do for the long term,” he said.
And in fact GameStop stock did not stay in the stratosphere for long.
At the beginning of the year GameStop’s share price was $17. But after climbing to $483 in late January at the height of the frenzy, the stock has been falling and was around $51 as of Friday.
Gill has posted updates about how much his GME stock and options have made on his own Reddit page and in the Wallstreetbets forum.
“We had nowhere close to a million dollars,” Gill said in a video posted on Christmas.
His investing experience had been a wild ride for him and his family, Gill said. He was happy to share it with his audience and for them to have fun and learn something along the way.
“It has brought me tremendous joy to share in what has turned out to be somewhat of a case study,” Gill said.
His last video posted on YouTube is from Jan. 22. He wrote on Twitter the same day that he would be stepping away from streaming for a bit.
The most recent screenshot Gill posted about his stock is from Feb. 3, which shows his shares and options were valued at $22 million — down more than half from his totals at the end of January.
He also said that he wouldn’t post investments as frequently.
Zapatero said a next step for Gill could be to sell most of his GameStop holdings, if he hasn’t already. Things have run their course and prices are dropping, he said.
Gill could look for other investment opportunities, the professor said. He has proven that he can spot profitable investing opportunities and Gill has established himself as someone with vision, Zapatero said.
But Gill’s activities have drawn attention from the Massachusetts Secretary of State’s office, which enforces securities laws.
Late Monday the office sent a subpoena to Gill to testify as it investigates whether securities regulations were violated while he worked at MassMutual and shared videos about GameStop in his free time, a spokesperson said.
The subpoena calls Gill before the Securities Division in Boston on Feb. 26.
He is a registered broker and worked for MassMutal, according to a report from the Financial Industry Regulatory Authority.
As of Wednesday, the office had not heard from Gill or a lawyer representing him, said Debra O’Malley, spokesperson for Secretary of State William Galvin.
Galvin’s office previously requested information from MassMutual about Gill’s responsibilities and how the company supervises registered brokers and their use of social media, O’Malley said.
Zapatero said he has read that some people think making videos like Gill did amounts to stock price manipulation, which is illegal, but he doesn’t agree.
Someone who owns stock in a company can make positive, public comments about the company they own, with the hope that other people will see that and its price will increase, Zapatero said.
That’s no different from an asset manager who goes on television to speak positively about a stock in their portfolio, which he said happens often.
Mina Corpuz, The Enterprise