While fans of GameStop (NYSE:GME) may be reeling from the recent lawsuit against Keith Gill, better known as Roaring Kitty, it turns out Chewy (NYSE:CHWY) executives may be the real victims here. Indeed, on Monday, Gill showed off a surprise 6.6% stake in Chewy, sending CHWY stock plummeting in the process.
CHWY stock is down almost 17% since Monday as investors brace for potential volatility following Gill’s reveal.
While Gill’s interest in the pet food retailer certainly comes as a surprise, it’s not completely without precedent. As is apparent from many social media posts, Gill is actually quite the fan of Ryan Cohen. The billionaire founder of Chewy is now serving as the current Chief Executive of GameStop. Thus, Gill’s impression of Cohen may have led to the investment in his old stomping grounds, Chewy.
Regardless, Gill’s investment in Chewy has alarmed the company’s top executives. They’re concerned that asset managers and shareholders may be put off from the stock due to Gill’s influence with retail investors and the volatility that follows.
CHWY Stock Slips as Gill Faces Legal Snafu
Per the Securities and Exchange Commission (SEC) filing, Gill purchased roughly 9 million shares of CHWY, worth about $245 million, last Friday at its then-price of $27.24 a share. This makes Gill Chewy’s fourth-largest shareholder.
It’s unclear if Gill’s investment in Chewy came at the expense of his holdings of GameStop stock. As of June 13, Gill owned about 9 million shares of GME worth $262.1 million at the time. Upon news of Gill’s ownership of Chewy, and news of the lawsuit brewing against him, GME stock fell 6% on Monday.
According to Plaintiff Martin Radev, Gill’s social media posts that sent GME stock soaring earlier in May amount to illegal stock manipulation, given that Gill owned large amounts of GME call options.
Roaring Kitty has become an icon in the meme-stock world. Indeed, aside from having an entire film produced about his rise to infamy in the 2023 comedy Dumb Money, Gill’s every move has been closely watched by his army of Redditors and meme-stock fans.
Whether Gill will face legal repercussions for his actions remains to be seen.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
