The stock price of online pet retailer Chewy went for a ride on Monday after one of the internet’s most-followed investors revealed that he had bought up shares in the company.
Chewy shares initially jumped 11% but have since turned negative, trading down 6% midday Monday.
The turbulence comes after Keith Gill, the leader of the “meme stock” movement who is better known online by the handle “Roaring Kitty,” revealed he had taken a significant stake in the company.
Gill had foreshadowed the Chewy holdings in a post on X last week that was simply a dog emoji.
Chewy shares — as well as other stocks in the pet trade — rallied immediately after the post Thursday.
On Monday, an SEC filing showed Gill had purchased shares worth approximately $245 million, or about 6.6% of the entire company at Friday’s closing price. Gill also mocked up his own version of the standard SEC 13G filing form by adding a section stating he was “not a cat.”
Gill shot to fame in 2020 after becoming the de facto leader of an online-populist movement to purchase stocks of legacy brick-and-mortar companies like GameStop, AMC and Bed Bath and Beyond, with the stated goal of attempting to turn the companies around. It didn’t quite work — although the movement did successfully create losses for investors who were actively betting against the companies.
But his trading has also been the subject of scrutiny.
Gill now faces a new class-action lawsuit filed in Brooklyn alleging that his most recent trades in GameStop shares amounted to a “pump and dump” scheme.
The plaintiff, Martin Radev, a Nevada resident, representing a class of other GameStop investors, alleges Gill knowingly used his large and influential platform to “pump” up the stock price of the company this year by posting online while failing to reveal he had taken up a new position in the company. Gill then successfully sold his shares for a profit, the lawsuit alleges.
The price of GameStop shares remains higher than before Gill’s post but has declined from its peak by about 50%.
They were down 5% in Monday trading.
In a twist, GameStop is now run by Ryan Cohen, who also co-founded Chewy. Cohen helped fuel the meme-stock wave after revealing he had taken a large position in GameStop in 2020, several months after Gill first began posting about his position.
Cohen is no longer affiliated with Chewy management, and it is not clear whether he and Gill have any relationship. An attorney for Cohen did not immediately respond to a request for comment.
The secretary of state of Massachusetts, where Gill resides, is also investigating the GameStop trade.
Gill did not immediately respond to a request for comment.