Cases
GameStop Corp.
Securities Class Action
Overview
Overview
- Date:
- 8/27/2024
- Company Name:
- GameStop Corp.
- Stock Symbol:
- GME
- Class Period:
- FROM 5/13/2024 TO 6/13/2024
- Status:
- Filed
- Filing Date:
- 6/28/2024
- Court:
- U.S. District Court: Eastern District of New York
Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against GameStop Corp. (“GameStop” or the “Company”) (NYSE: GME) in the United States District Court for the Eastern District of New York on behalf of all persons and entities who purchased or otherwise acquired GameStop securities between May 13, 2024 and June 13, 2024, both dates inclusive (the “Class Period”). Investors have until August 27, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
GameStop is a specialty retailer that provides games and entertainment products through its stores and ecommerce platforms in the U.S., Canada, Australia, and Europe. GameStop’s principal executive offices are located at 625 Westport Parkway, Grapevine, Texas 76051. The Company’s Class A common stock trades in an efficient market on the New York Stock Exchange under the ticker symbol “GME.”
Defendant Keith Patrick Gill, known as “Roaring Kitty” on YouTube and the social media platform X (f/k/a Twitter), as well as “DeepF***ingValue” (“DFV”) on the social media platform Reddit, is an American financial analyst and investor, as well as former financial analyst for Massachusetts Mutual Life Insurance Company, also referred to as “MassMutual.” Defendant is also a former registered stockbroker who holds several securities-industry licenses, as well as one of GameStop’s largest shareholders. As of June 2024, Defendant had over 1.6 million followers on X, 982,000 subscribers on YouTube, 116,000 members on his personal subreddit “r/roaringkitty” (ranked “Top 2%” in size among top Reddit communities), and 200,000 members on his personal subreddit “r/DeepF***ingValue.”
Defendant was a key figure in the so-called “meme stock” movement, which saw shares of GameStop and a handful of other companies surge as much as twenty-one-fold over two weeks in January 2021 before crashing to pre-surge levels in the subsequent days. Meme stocks are stocks that gained viral popularity on discussion threads on social media platforms like Reddit and X, where online communities of retail investors dedicated their attention to particular stocks, sometimes for purposes of initiating a squeeze on short investors and hedge funds, and other times based on genuine beliefs about a company’s prospects.
Defendant’s ability to rally a massive following of retail investors to purchase and hold GameStop securities through his social media posts is well-documented. In 2021, after the meme stock movement sparked chaos in the financial markets as major hedge funds and others lost billions of dollars in short-squeeze events, Defendant testified before the U.S. House Committee on Financial Services about the meme stock movement as the perceived champion and face of that movement for GameStop investors. In fact, Defendant is largely credited as sparking the meme stock movement and, in 2023, a biographical film called Dumb Money was released chronicling these events and Defendant’s subsequent rise to celebrity status.
Defendant’s last post on Reddit in 2021 showed that his GameStop positions were worth approximately $30 million. Defendant made his fortune as an investor largely, if not entirely, as a result of his participation in the 2021 meme stock movement.
On May 12, 2024, for the first time in nearly three years, Defendant made a post on the social media platform X, which took the form of a meme showing a “gamer”—that is, an individual that plays video games—in a suit, leaning forward in his chair in seeming concentration and/or attention. As reported by multiple news outlets, this meme was widely understood by Defendant’s followers, analysts, and others to mean that Defendant was watching and/or following GameStop’s performance. Over the next few days, Defendant posted a series of subsequent memes on X—largely taking the form of video clips with a battle or fight theme from popular movies and television shows, overlaid with text or other graphics—that were similarly understood to generally reflect Defendant’s renewed interest in GameStop.
As the market reacted to Defendant’s posts, GameStop’s stock price surged, rising by $12.99 per share, or over 74%, to close at $30.45 per share on May 13, 2024—the first trading day following Defendant’s post on X. GameStop’s stock price continued to climb the following trading day, closing at $48.75 per share, an increase of over 179% from the stock’s closing price of $17.46 per share on May 10, 2024—the last trading day before Defendant’s post on X—only to normalize again and close as low as $18.32 per share by May 23, 2024.
On Sunday, June 2, 2024, to pump the prices of GameStop’s securities back up, Defendant revealed his large stake in the Company via a post on Reddit, causing GameStop shares to soar more than 70% in early premarket trading on June 3, 2024. In particular, Defendant posted a screenshot of his GameStop portfolio on Reddit through his DFV account, revealing that he owned 5 million shares of GameStop stock and 120,000 GameStop call options with a strike price of $20, which were set to expire on June 21, 2024. Significantly, this post did not reveal when Defendant had purchased these securities.
On June 3, 2024, GameStop’s stock price ultimately closed at $28.00 per share—21% higher than the prior trading day’s closing price of $23.14 per share on May 31, 2024.
On June 3, 2024, shortly before markets closed, the Wall Street Journal (“WSJ”) published an article revealing that Defendant had purchased “a large volume of GameStop options on E*Trade” shortly before his May 12, 2024 post on X that sent GameStop securities soaring. The WSJ reported that “E*Trade is considering telling Defendant that he can no longer use its platform after growing concerned about potential stock manipulation around his recent purchases of GameStop options, according to people familiar with the matter.” The article reported that “[s]hortly before [Defendant] reignited a meme-stock craze in May, he bought a large volume of GameStop options on E*Trade,” and that “[t]his week, Gill posted screenshots of an E*Trade account showing he owns GameStop shares now valued at $140 million and a new set of options that expire later this month. His total gains on the positions were at $85.5 million, he posted late [on June 3], showing his account remained in operation.” The WSJ article stated that “E*Trade and its owner Morgan Stanley” had “concerns [Defendant] can pump up a stock for his own benefit” and are “debat[ing] whether his actions amounted to manipulation[.]” Finally, the article reported that “the Massachusetts securities division is looking into [Defendant]’s activities” and that “[t]he [SEC] has also been reviewing trading in GameStop call options around the time of [Defendant]’s social media posts[.]”
On this news, GameStop’s stock price fell $1.50 per share, or 5.36%, to close at $26.50 per share on June 4, 2024.
Then, on June 13, 2024, during after-market hours, Defendant posted another screenshot of his GameStop portfolio on Reddit through his DFV account, showing that his portfolio no longer included the 120,000 GameStop call options set to expire on June 21, 2024, and that his position in GameStop stock had increased from 5 million shares to over 9 million shares, making him one of the Company’s largest shareholders. Defendant profited handsomely from these transactions. In particular, before his May 12, 2024 post on X that reignited the meme stock movement, GameStop call options were generally trading at less than $3.00 per option contract. After his May 12, 2024 post on X and during the Class Period, the value of these options rose dramatically to an average of $10.16 per option contract, peaking at a closing price of $31.00 per option contract on May 14, 2024 during the Class Period. These same options traded at around $5.00 per option contract as of their June 21, 2024 expiration date.
Following news that Defendant had sold and/or exercised these GameStop call options, GameStop’s stock price fell $4.42 per share, or 15.18%, over three consecutive trading sessions, to close at $24.70 per share on June 18, 2024.
The complaint alleges that Defendant engaged in a pump-and-dump scheme, whereby he: (i) shortly before his May 12, 2024 social media post on X, and unknown to investors, quietly purchased a large volume of GameStop call options on E*Trade at comparatively low prices; (ii) on May 12, 2024, reignited the meme stock movement and pumped the value of GameStop securities with his first social media post on X in nearly three years; (iii) after the prices of GameStop securities had abated, pumped the value of GameStop securities again via a June 2, 2024 post of his GameStop portfolio on Reddit, disclosing his large position in GameStop securities, including 120,000 GameStop call options and 5 million shares of GameStop stock; and (iv) by June 13, 2024, quietly sold and/or exercised (i.e., dumped) all 120,000 of his GameStop call options for a large profit, seemingly to increase his own stake in GameStop stock by over 4 million shares, belatedly revealing as much to investors on June 13, 2024, during after-market hours.
If you purchased or otherwise acquired GameStop shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
GameStop is a specialty retailer that provides games and entertainment products through its stores and ecommerce platforms in the U.S., Canada, Australia, and Europe. GameStop’s principal executive offices are located at 625 Westport Parkway, Grapevine, Texas 76051. The Company’s Class A common stock trades in an efficient market on the New York Stock Exchange under the ticker symbol “GME.”
Defendant Keith Patrick Gill, known as “Roaring Kitty” on YouTube and the social media platform X (f/k/a Twitter), as well as “DeepF***ingValue” (“DFV”) on the social media platform Reddit, is an American financial analyst and investor, as well as former financial analyst for Massachusetts Mutual Life Insurance Company, also referred to as “MassMutual.” Defendant is also a former registered stockbroker who holds several securities-industry licenses, as well as one of GameStop’s largest shareholders. As of June 2024, Defendant had over 1.6 million followers on X, 982,000 subscribers on YouTube, 116,000 members on his personal subreddit “r/roaringkitty” (ranked “Top 2%” in size among top Reddit communities), and 200,000 members on his personal subreddit “r/DeepF***ingValue.”
Defendant was a key figure in the so-called “meme stock” movement, which saw shares of GameStop and a handful of other companies surge as much as twenty-one-fold over two weeks in January 2021 before crashing to pre-surge levels in the subsequent days. Meme stocks are stocks that gained viral popularity on discussion threads on social media platforms like Reddit and X, where online communities of retail investors dedicated their attention to particular stocks, sometimes for purposes of initiating a squeeze on short investors and hedge funds, and other times based on genuine beliefs about a company’s prospects.
Defendant’s ability to rally a massive following of retail investors to purchase and hold GameStop securities through his social media posts is well-documented. In 2021, after the meme stock movement sparked chaos in the financial markets as major hedge funds and others lost billions of dollars in short-squeeze events, Defendant testified before the U.S. House Committee on Financial Services about the meme stock movement as the perceived champion and face of that movement for GameStop investors. In fact, Defendant is largely credited as sparking the meme stock movement and, in 2023, a biographical film called Dumb Money was released chronicling these events and Defendant’s subsequent rise to celebrity status.
Defendant’s last post on Reddit in 2021 showed that his GameStop positions were worth approximately $30 million. Defendant made his fortune as an investor largely, if not entirely, as a result of his participation in the 2021 meme stock movement.
On May 12, 2024, for the first time in nearly three years, Defendant made a post on the social media platform X, which took the form of a meme showing a “gamer”—that is, an individual that plays video games—in a suit, leaning forward in his chair in seeming concentration and/or attention. As reported by multiple news outlets, this meme was widely understood by Defendant’s followers, analysts, and others to mean that Defendant was watching and/or following GameStop’s performance. Over the next few days, Defendant posted a series of subsequent memes on X—largely taking the form of video clips with a battle or fight theme from popular movies and television shows, overlaid with text or other graphics—that were similarly understood to generally reflect Defendant’s renewed interest in GameStop.
As the market reacted to Defendant’s posts, GameStop’s stock price surged, rising by $12.99 per share, or over 74%, to close at $30.45 per share on May 13, 2024—the first trading day following Defendant’s post on X. GameStop’s stock price continued to climb the following trading day, closing at $48.75 per share, an increase of over 179% from the stock’s closing price of $17.46 per share on May 10, 2024—the last trading day before Defendant’s post on X—only to normalize again and close as low as $18.32 per share by May 23, 2024.
On Sunday, June 2, 2024, to pump the prices of GameStop’s securities back up, Defendant revealed his large stake in the Company via a post on Reddit, causing GameStop shares to soar more than 70% in early premarket trading on June 3, 2024. In particular, Defendant posted a screenshot of his GameStop portfolio on Reddit through his DFV account, revealing that he owned 5 million shares of GameStop stock and 120,000 GameStop call options with a strike price of $20, which were set to expire on June 21, 2024. Significantly, this post did not reveal when Defendant had purchased these securities.
On June 3, 2024, GameStop’s stock price ultimately closed at $28.00 per share—21% higher than the prior trading day’s closing price of $23.14 per share on May 31, 2024.
On June 3, 2024, shortly before markets closed, the Wall Street Journal (“WSJ”) published an article revealing that Defendant had purchased “a large volume of GameStop options on E*Trade” shortly before his May 12, 2024 post on X that sent GameStop securities soaring. The WSJ reported that “E*Trade is considering telling Defendant that he can no longer use its platform after growing concerned about potential stock manipulation around his recent purchases of GameStop options, according to people familiar with the matter.” The article reported that “[s]hortly before [Defendant] reignited a meme-stock craze in May, he bought a large volume of GameStop options on E*Trade,” and that “[t]his week, Gill posted screenshots of an E*Trade account showing he owns GameStop shares now valued at $140 million and a new set of options that expire later this month. His total gains on the positions were at $85.5 million, he posted late [on June 3], showing his account remained in operation.” The WSJ article stated that “E*Trade and its owner Morgan Stanley” had “concerns [Defendant] can pump up a stock for his own benefit” and are “debat[ing] whether his actions amounted to manipulation[.]” Finally, the article reported that “the Massachusetts securities division is looking into [Defendant]’s activities” and that “[t]he [SEC] has also been reviewing trading in GameStop call options around the time of [Defendant]’s social media posts[.]”
On this news, GameStop’s stock price fell $1.50 per share, or 5.36%, to close at $26.50 per share on June 4, 2024.
Then, on June 13, 2024, during after-market hours, Defendant posted another screenshot of his GameStop portfolio on Reddit through his DFV account, showing that his portfolio no longer included the 120,000 GameStop call options set to expire on June 21, 2024, and that his position in GameStop stock had increased from 5 million shares to over 9 million shares, making him one of the Company’s largest shareholders. Defendant profited handsomely from these transactions. In particular, before his May 12, 2024 post on X that reignited the meme stock movement, GameStop call options were generally trading at less than $3.00 per option contract. After his May 12, 2024 post on X and during the Class Period, the value of these options rose dramatically to an average of $10.16 per option contract, peaking at a closing price of $31.00 per option contract on May 14, 2024 during the Class Period. These same options traded at around $5.00 per option contract as of their June 21, 2024 expiration date.
Following news that Defendant had sold and/or exercised these GameStop call options, GameStop’s stock price fell $4.42 per share, or 15.18%, over three consecutive trading sessions, to close at $24.70 per share on June 18, 2024.
The complaint alleges that Defendant engaged in a pump-and-dump scheme, whereby he: (i) shortly before his May 12, 2024 social media post on X, and unknown to investors, quietly purchased a large volume of GameStop call options on E*Trade at comparatively low prices; (ii) on May 12, 2024, reignited the meme stock movement and pumped the value of GameStop securities with his first social media post on X in nearly three years; (iii) after the prices of GameStop securities had abated, pumped the value of GameStop securities again via a June 2, 2024 post of his GameStop portfolio on Reddit, disclosing his large position in GameStop securities, including 120,000 GameStop call options and 5 million shares of GameStop stock; and (iv) by June 13, 2024, quietly sold and/or exercised (i.e., dumped) all 120,000 of his GameStop call options for a large profit, seemingly to increase his own stake in GameStop stock by over 4 million shares, belatedly revealing as much to investors on June 13, 2024, during after-market hours.
If you purchased or otherwise acquired GameStop shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in GameStop Corp.. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against GameStop Corp. (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for violation of federal or state securities laws.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 5/13/2024 to 6/13/2024 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you purchased the Company’s shares during the period from 5/13/2024 to 6/13/2024 (the “Relevant Period”). Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders, i.e., the “Class,” and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other Class members or the Company, as applicable, concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff or class representative in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
No Special Treatment
You understand that in the event we secure a recovery for a Class in a class action, you will only be entitled to your proportional share of such recovery as a Class member. You understand that you will not receive any special treatment or receive a greater share of any class-wide recovery based on your service as a named plaintiff or class representative. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.