GameStop meme-traders see industry backlash

GameStop (NYSE:GME) meme-traders faced something of a backlash on Tuesday as financial institutions and regulators scrutinised recent trading activity.

Morgan Stanley’s E*Trade platform is considering banning Keith Gill, the Reddit meme-trader known online as Roaring Kitty, due to concerns about his trading activities.

Elsewhere, the Massachusetts Securities Regulator is reportedly investigating Gill following his post on Reddit in which he appeared to reveal a large trading position in GameStop.

It comes after GameStop stock surged again on Monday after Gill posted a screenshot on Reddit that showed a $116 million position in the video game retailer. The post revealed that Gill holds 5 million shares with an average cost basis of $21.27 each, plus 120,000 call options worth $65.7 million, set to expire on June 21.

Gill’s return to social media, after a three-year hiatus, has reignited interest in meme stocks. His previous posts significantly influenced the retail trading frenzy around GameStop in 2021.

The Reddit post followed a series of meme videos posted to X (formerly Twitter) a number of weeks ago, which prompted a resurgence of so-called ‘meme trading’ through the month of May.