Sparks: Roaring Kitty back at it; Paramount’s star-studded deal ⚡️

News · 7 June 2024Tiarnán McCartney

Welcome to Sparks, your weekly breakdown of some of the most interesting market news.

Here’s what sparked our interest this week:

  • Roaring Kitty reveals GME stake on Reddit
  • Paramount clinches deal with Skydance Media
  • Boeing heads into orbit, despite setbacks

Guess who’s back, back again? 🎮

Well, it ain’t Slim — but it might be shady… (actually, Eminem is back too).

Keith Gill, AKA "Roaring Kitty", "DeepF—-ingValue", and “the guy who started the meme stock thing”, is stirring the financial pot once again. A simple, uncaptioned screenshot of a portfolio posted on Reddit by an account linked to Gill suggested he might be holding $289 million worth of GameStop stock as of this Monday. This unexpected move sent GameStop shares soaring — again.

On Monday this week, GameStop shares jumped 21%, closing at $28 and netting the account holder approximately $79 million. Roaring Kitty’s recent return to the scene has raised eyebrows all around, with brokerage E*Trade reportedly considering kicking Gill off its platform over concerns about potential stock manipulation.

Gill, who became a folk hero during the 2021 meme-stock frenzy, hasn't commented on the recent posts — but he did post an Uno reverse card to X (what does it mean???). His return has reignited discussions among investors, with some commentators even speculating that Gill might not be behind these recent posts, but could have sold his social media accounts. Meanwhile, regulatory bodies are investigating the situation to ensure that there's no market manipulation going on.

Keith Gill's latest move has once again highlighted his genie-like influence on GameStop's stock. Whether this sparks another meme-stock rally or just a brief resurgence remains to be seen, but it's certainly keeping investors and regulators on their toes.

The numbers

  • $289 million — The alleged value of Keith Gill's GameStop holdings as of this Monday
  • 21% — The surge in GameStop shares on Monday following Gill's Reddit post
  • 120,000 — The number of call options Gill holds, expiring on 21 June 2024, which could let him buy an additional 12 million shares

Happy ending 🍿

In true Hollywood fashion, Paramount’s recent acquisition talks haven’t skimped on drama. The media giant, owner of Paramount Pictures and CBS, has been the talk of the town since last year, attracting a host of high-profile suitors and a plethora of plot twists.

Ultimately, Skydance Media, backed by RedBird Capital Partners and KKR, emerged victorious. The deal, expected to be announced soon, values Paramount at $8 billion. While Skydance might not be a household name, its CEO, David Ellison, certainly has pedigree ‌ — ‌ he's the son of Oracle founder Larry Ellison.

The deal drew interest from the likes of Warner Bros. Discovery chief David Zaslav, media mogul Byron Allen, and Apollo Global Management paired with Sony. However, Shari Redstone, who controls Paramount, favoured Skydance’s proposal for keeping the company whole, as opposed to Apollo, who planned to carve it up.

Amidst the buzz, Paramount has faced plenty of its own drama. The day after a record-setting Super Bowl broadcast this year, the company announced layoffs and saw its CEO step down. Despite a recent bump from deal speculation, as of 5 June 2024, Paramount’s stock is still down nearly 17% this year so far.

The numbers

  • $8 billion — The value of the Skydance deal to acquire Paramount
  • $2 billion — Expected amount Shari Redstone will receive for National Amusements’ voting shares
    • 16.6% — Year-to-date decline in Paramount’s stock, despite recent deal buzz

    In other news 🤓

    Some other sparks that have been flying this week:

    • Feeling the heat — Meta is facing legal heat from ex-engineer Ferras Hamad, who claims he was fired for trying to fix bugs that suppressed Palestinian Instagram posts. In a California lawsuit, Hamad alleges Meta's bias against Palestinians, including deleting internal communications that mentioned the deaths of their relatives in Gaza and investigating Palestinian flag emojis while ignoring similar Israeli and Ukrainian posts. This lawsuit echoes long-standing criticisms and comes after nearly 200 employees raised concerns about Meta's handling of pro-Palestinian content.
    • Diverted — Elon Musk’s ambitious vision to turn Tesla into an AI and robotics powerhouse is hitting a few bumps. Despite his bold claims on Tesla’s Q1 earnings call about ramping up purchases of Nvidia H100 AI chips from 35,000 to 85,000, and a $10 billion AI investment, internal Nvidia emails paint a different picture. It turns out Musk diverted a big chunk of AI processors meant for Tesla to his social media venture, X (formerly Twitter), pushing back Tesla’s GPU delivery by months. This mix-up has likely delayed Tesla's AI projects and caused Tesla shares to slip by as much as 1% on the news.
    • Third time's the charm — Boeing's Starliner mission finally took flight this week — the culmination of a decade-long journey. The spacecraft, atop an Atlas V rocket, took off from Cape Canaveral on Wednesday this week. However, for Boeing, it hasn’t all been plain sailing of late. Previous attempts on 6 May 2024 and 1 June 2024 were marred by technical glitches, including issues with a valve on the rocket's second stage, a helium leak, and problems with the spacecraft's propulsion system and parachutes. Furthermore, the company is currently under investigation by US airline regulators, after a door plug blew off one of its planes earlier this year. As of 5 June 2024, Boeing’s stock is down almost 25% this year so far.

    Next week 🗓️

    Earnings reports are expected from BroadcomTesla, and Adobe, Inc.

    That’s all for this week!

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