Chewy shares fall nearly 7% as the boost from Roaring Kitty’s new stake diminishes

Keith Gill, aka Roaring Kitty, hosting a YouTube livestream on June 7th, 2024.

Source: Roaring Kitty | YouTube

The rally in Chewy shares lost steam Monday as traders reacted to a Securities and Exchange Commission filing that showed meme stock trader “Roaring Kitty” took a stake in the pet food e-commerce retailer.

The filing showed Roaring Kitty, whose legal name is Keith Gill, bought just over 9 million shares — amounting to a 6.6% stake in the company. That makes him the third-biggest Chewy shareholder, according to FactSet. Based on Friday’s close, that stake is valued at more than $245 million.

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CHWY rallies

The stock rallied more than 9% on Monday, but it quickly fell into negative territory in morning trading. Shares ended the day down 6.6%.

The SEC filing also included a section that read: “Check the appropriate box to designate whether you are a cat.” There was an “x” next to a response that read: “I am not a cat.” This line was included in Gill’s statement in a series of congressional hearings about 2021’s GameStop trading mania.

Chewy shares took a wild ride last week after Gill posted a picture on social media platform X of a cartoon dog that resembled Chewy’s logo. The shares were up as much as 34% on Thursday but ended the day down slightly.

CNBC emailed Chewy’s public relations team seeking comment on the new shareholder.

Gill is known to be a champion of GameStop and has been stirring up trading in the video game company in the last few months. In mid-June, he disclosed a stake of 9.001 million GameStop shares after exiting his massive call options position. It’s unclear if he sold his GameStop bet to fund the purchase of Chewy.

GameStop shares fell more than 5% following the news.

There’s a big connection between GameStop and Chewy. GameStop CEO Ryan Cohen was founder and the first CEO of Chewy, who was instrumental in PetSmart’s takeover of Chewy in 2017 and its subsequent initial public offering in 2019.

Cohen joined the GameStop board of directors along with two other Chewy executives in January 2021, partly helping fuel the initial GameStop rally. He later took over as GameStop CEO in 2023, leading a turnaround in the brick-and-mortar video game retailer.

In a recent YouTube livestream, Gill said GameStop is in the second stage of a reinvention, and it has become a bet on Cohen himself, who’s also been leading a pivot to e-commerce.

The investor was hit by a new class-action lawsuit filed Friday, alleging he engaged in securities fraud by manipulating GameStop’s stock price through his online influence in May and June. The case was voluntarily dismissed on Monday.

Gill is a former marketer for Massachusetts Mutual Life Insurance. He came into the limelight after successfully encouraging retail investors to buy GameStop shares and call options in 2021 to squeeze out short-selling hedge funds.

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