Roaring Kittys Daring Move Keith Gill Puts 245M into Chewy Despite GameStop Lawsuit
Keith Gill, known as Roaring Kitty, has made a significant move by purchasing 9 million shares of Chewy Inc. This occurs amidst a class-action lawsuit concerning his role in the 2021 GameStop stock surge.
Does the lawsuit against Keith Gill for securities fraud hold any weight? Let’s delve deeper.
### Major Investment in Chewy Inc.
Gill’s recent acquisition of Chewy Inc. shares, totaling $245.18 million, equates to a 6.6% ownership in the company. This transaction positions Gill as one of the largest shareholders in Chewy, a leading pet products retailer on the New York Stock Exchange.
### The SEC 13G Filing
The SEC 13G filing disclosed Gill’s purchase of 9.01 million CHWY shares, prompting a 22% increase in Chewy’s shares during premarket trading. This $245 million investment solidifies Roaring Kitty’s status as a major shareholder. Prior to this, Gill teased his investment strategy by posting a cryptic image of a dog on his social media. While Chewy’s shares climbed, GameStop’s stock saw a 5% dip in pre-market trading on Monday.
### Legal Troubles with GameStop
Despite his successful Chewy investment, Gill faces legal issues related to GameStop. The lawsuit filed on June 28 accuses Gill of a ‘pump-and-dump’ scheme via social media posts starting May 13. Plaintiffs allege that these posts misled investors, leading to significant financial losses.
Eric Rosen, a former prosecutor, doubts the lawsuit’s success, arguing that proving Gill’s guilt based on social media activity alone is challenging. The lawsuit asserts that Gill failed to disclose his GameStop option transactions properly, misleading his followers and causing financial harm. Plaintiff Martin Radev, represented by the Pomerantz law firm, claims to have suffered losses after purchasing 25 GameStop shares and three call options, which subsequently plummeted in value.
### Market Reactions
In response to these legal issues, GameStop’s stock continues to fall, dropping 6.89% to $22.99 in Monday’s pre-market session. Last week, GME stock closed at $24.69, a 1.59% decline on Friday, June 28. Conversely, Chewy’s shares surged up to 29% in premarket trading.
Despite the ongoing lawsuit, Gill’s investment in Chewy may attract more investor interest, potentially marking a strategic move as the company aims for market expansion.
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